Disney Presses Apple to Carry More Channels on Internet TV Service


NEW YORK (TheStreet) -- Apple (AAPL) and Walt Disney (DIS) executives in intensified negotiations in recent weeks are dealing with, among other things, the nettlesome issue of how many Disney-owned channels Apple will be required to carry on its long awaited Apple TV broadband video service.

According to people with knowledge of the talks, Disney is pressing Apple to take most if not all of its channels, which include several channel spinoffs of its mainstays ESPN and Disney Channel, while Apple wants to take fewer channels in a bid to keep the price down for its service, which is expected to be launched later this year.

"Disney has made it clear that it wants to drive the strongest deal it can get," said one person with knowledge of the talks who is not authorized to speak about the negotiations. A Disney spokeswoman would not comment on the matter.

Apple hopes to announce content partners for its broadband video service in June, according to media reports, and to launch its subscriber service later in the year. Apple is said to be aiming for a 25-channel offering priced at $30 to $40 a month. Apple spokesman Tom Neumayr declined to comment.

The talks with Disney are important to Apple, according to one of the people, because Disney's channels, which also include ABC Family, are considered essential for the young families and younger men who are among the most likely TV watchers to "cut the cord" and choose lower-priced Internet-based options to their cable or satellite services.

Disney, which broke with its media industry peers in 2005 to offer its TV shows on Apple's iTunes, is still considered to be a likely partner for Apple this time as well. But the media giant needs to protect its hugely profitable cable TV channel unit and doesn't want to anger cable and satellite operators who, according to consultants SNL Kagan, pay Disney $12.1 billion a year in affiliate fees.

Disney is among the industry's leading proponents of maintaining the so-called "bundle" of channels  by which TV distributors contract to license most or all of its channels. 

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