NEW YORK ( TheStreet) -- Apple ( AAPL) absolutely has to have something up its sleeve. The few things we have been reading about the forthcoming iTV (or whatever they will call it), as they pertain to content, simply cannot be true. If they are, I am even more long-term bearish AAPL than I thought I was.
For a while now, we have been hearing that Apple is running into myriad roadblocks as it attempts to snag premium content from Hollywood's old guard. This should come as no surprise. While Apple strong-armed the music industry into doing exactly what it wanted, how it wanted it done and when it wanted it to happen, that act will not fly with the TV and movie guys. Apple pulls sway with wireless carriers to subsidize the living heck out of iPhone because it operates from a position of massive strength in that relationship. It might even be able to take cable and satellite companies to the cleaners to subsidize iTV. When you look to the owners of premium content, however, Apple is really not all that different than Netflix ( NFLX). Follow TheStreet on Twitter and become a fan on Facebook. Certainly, Apple is 500 times the company Netflix is. It has loads more money. From every angle, Apple reigns superior over Netflix. Then, why does it appear that Apple is looking to mold iTV from what basically amounts to a Netflix model? There has to be more, much more, to the story. Is Apple really going to enter a bidding war with the likes of Rupert Murdoch's Sky Sports and Al Jazeera to secure English broadcast rights to English Premier League soccer? And if Apple is indeed talking to Epix about content it's sane and logical to imagine it's talking to other big-time content owners as well. If this is the case, it's a good thing Apple has billions upon billions of dollars at its disposal. The level of spending Apple will have to attain to cull together a robust offering will make the several billion Netflix is on the hook for look like the car payment on a new Dodge Dart. In other words, Apple will do what Netflix needs to do, but does not have the cash to do to be successful. But, that's a surface scratch view that ignores context.
Even if Netflix found itself flush with Apple-like cash it could never be successful as a middle man. Unless Apple offers up most of its war chest of cash, it will find itself in a situation similar to Netflix. Content owners have roughly the same amount of incentive to offer Apple premium programming as they do Netflix. Apple operates from more of a position of strength than Netflix given the popularity of its products, but that's not enough to impress and intimidate Hollywood. Steve Jobs had apparently figured out the living room before he passed away. I am not exactly sure what that means. I'm pretty confident that it means he settled on the proper approach from key standpoints, ranging from utility to design to integration to marketing. But, I am not sure he was able to figure out the content conundrum. This is what makes iTV such a major gamble. Even if Apple sells as many iTVs as it does Macs (just over 4 million this past quarter), it will not achieve the critical mass necessary for content owners to do what it wants. And, again, without knowing exactly what Jobs figured out, it's tough to determine exactly what Apple wants. It appears, however, that the company wants to bring wholesale revolution to yet another industry. Historically, I'm not one to question Apple. After watching Steve Jobs steamroll through the music business, I have no doubt that Apple will send sectors such as education and eBooks for a loop. That process is already under way. But two things make the effort to reshape the way we watch "television" an uphill and potentially impossible climb. Unless iTV grabs massive market share -- and fast -- content owners have no incentive whatsoever to get on board. Apple will be stuck with the same nonexclusive scraps Netflix and others have to settle for. The only way Apple obtains top-notch premium programming (and enough of it to put together a complete offering) is to pay exorbitant amounts of money for it. But it does not stop there. The content owners will demand that Apple charge viewers a premium to access that content through iTV. Just browse through the iTunes store. To put together a wide-ranging slate of television and movie viewing going that route would eat up a middle-class salary overnight.
To provide a full-scale selection of quality programming via iTV, Apple effectively must become a cable provider. I highly doubt it wants to enter that space. If it does, look for the decline to happen sooner rather than later. So, again, Apple is not this dumb. There must be more to the story. There has to be. Steve Jobs had other ideas; things you and I never could have imagined. This leads into obstacle number two -- Steve Jobs no longer walks the Earth. He no longer walks into boardrooms and gets what he wants, how he wants it and when he wants it. He cannot twist arms and proceed to execute and market what he gets to perfection. That's up to the people he left behind. If you think they're up to the task, I respect your opinion. I have to wonder, however, if you're discounting the power of Steve Jobs as well as the enormity of what needs to get done in the process.