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What Apple Will Do to the World of TV

Stocks in this article: AAPLDISGOOGTMOT

The biggest wireless carriers have spent billions upgrading their networks to try and have an edge providing better services to their data hungry users.

It's hard not to think the same kind of tsunami might be getting ready to hit the television industry with the introduction of Apple TV. Some, including Henry Blodget, are playing up the changes by suggesting the traditional TV industry is about to collapse. Others, such as Dan Frommer, think cable and traditional TV are too powerful to succumb to any changes Apple might throw at it.

The reality will probably come in between, just as has been the case in the telecom industry.

In the TV industry, there's the other TV set makers, the other streamers, the cable companies/networks (aren't they one and the same now?) and the content producers.

The TV makers appear to be ready to reprise the role of the handset makers, struggling to make a profit. Apple has the advantage of already locking up long-term supply contracts. It'll also be able to charge decent margins or (more frightening for competitors) take a more aggressive approach, as with the iPad. And unlike the competitors they don't have to give up any of their margins to the Best Buys (BBY) of the world -- glorified middlemen. Apple sells it all direct -- online or through their network of stores.

The streamers also look like they'll have a hard time competing. Apple can offer content producers a great platform with lots of subscribers. At the end of the day, that's what Hollywood wants. If the price for content goes up, Apple can belly up to the bar.

Hollywood seems ambivalent about Apple TV. It sees what the 99-cent deal did to the music industry a dozen years ago and doesn't want to make the same mistake. Yet it also sees a world moving toward four screens (TV, PC, phone and tablet) and increasingly mobile. It knows HBO Go is the start of something, with or without Apple. But, at the end of the day, it'll be the content people want to see. Hollywood can either go ultra-premium (think Game of Thrones) or low-cost reality show. There will also be millions of iJustines fighting for attention.

Most people seem to think the cable companies and networks will be destroyed by Apple pushing an a la carte model. Yet, it's tough for me to see that Apple would be intent on killing ABC and Disney (DIS) when Bob Iger sits on Apple's board and Steve Jobs' estate is the biggest owner of Disney stock.

Disney has also signed a 10-year deal for ESPN with Comcast (CMCSA) recently.

So, I think Apple is going to be playing for the long term with TV. It's not about "killing" an entire industry. It's about delivering the best TV experience anyone has ever had. It probably means lots of help from Siri making suggestions for you. It probably does mean the "app-ification" of TV channels. It probably means the deep integration of Twitter and Facebook (FB) into the TV experience. Mostly it probably means better software and artificial intelligence than any TV maker has ever seen before.

But make no mistake, five years from now, the television industry will be as deeply affected by the arrival as the telecom industry is today.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication, Eric Jackson was long AAPL.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at eric.jackson@thestreet.com.

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