Apple Said to Plan TV Box Amid Time Warner Cable Talks

Photographer: David Caudery/MacFormat magazine via Getty Images

A file photo shows a current Apple Inc. TV device. A newer device, not yet unveiled by Apple will have a faster processor than the previous version and an upgraded interface to make it easier for customers to navigate between TV shows, movies and other online content, one person said. Close

A file photo shows a current Apple Inc. TV device. A newer device, not yet unveiled by... Read More

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Photographer: David Caudery/MacFormat magazine via Getty Images

A file photo shows a current Apple Inc. TV device. A newer device, not yet unveiled by Apple will have a faster processor than the previous version and an upgraded interface to make it easier for customers to navigate between TV shows, movies and other online content, one person said.

Apple Inc. (AAPL) is planning to introduce a new Apple TV set-top box and is negotiating with Time Warner Cable Inc. (TWC) and other potential partners to add video content, according to people with knowledge of the matter.

Apple is aiming to unveil the device by April and have it available for sale by the Christmas holidays, though the release date could change because the company is still in the process of securing new agreements with programming and distribution partners, said two people, who asked not to be identified because the plans are private.

The new device, which plugs into a television set, will have a faster processor than the previous version and an upgraded interface to make it easier for customers to navigate between TV shows, movies and other online content, one person said. An agreement with Time Warner Cable would mark the first such deal with a cable or satellite company.

Tom Neumayr, a spokesman for Cupertino, California-based Apple, declined to comment, as did Maureen Huff, a spokeswoman for New York-based Time Warner Cable.

The product would set off what Apple Chief Executive Officer Tim Cook has promised to be a year full of new product introductions. The company also is exploring a smartwatch, people familiar with the plans have said. Apple needs new gadgets to revive growth after sales and profit stagnated in recent quarters.

Existing Structure

The release of an updated Apple TV box would be different from a full-sized television, which industry analysts such Gene Munster of Piper Jaffray Cos. have predicted.

Apple’s talks with Time Warner Cable have been going on since at least the middle of last year. The lag time between when Apple may announce the new set-top box and its release is because of ongoing negotiations with content providers.

The Time Warner deal would let Apple TV customers see a wider array of live TV channels. For the moment, they can access a limited number of individual channel apps, including Disney, ABC, ESPN, HBO, PBS and Bloomberg TV, owned by Bloomberg News parent Bloomberg LP.

Access to some programming on Apple TV requires customers to prove they pay for cable or satellite, a process known as authentication. Each different app requires a login and password to be entered.

Fewer Steps

Apple has been working to streamline the process with the new Apple TV and has run into problems with Comcast Corp. (CMCSA) and DirecTV, the two largest pay-TV distributors, according to two people with knowledge of the matter.

Eddy Cue, the head of Apple’s iTunes, has been trying to convince the two companies to let customers use Apple IDs instead of credentials from Comcast and DirecTV, these people said. The distributors would prefer keeping their customer information separate from Apple, according to the people.

In the market for digital set-top boxes, Apple is competing against Microsoft Corp. (MSFT)’s Xbox One and Roku Inc.’s Internet-connected device. Amazon.com Inc. also has been working on a TV box, Bloomberg News reported in April, and Comcast entered the market late last year with its new digital interface -- called X1 -- that sells and rents TV shows and films much the way that Apple does through iTunes.

More Devices

For Time Warner Cable, the deal would advance its “TV Everywhere” strategy, giving customers the ability to watch content on different devices. Its viewing app is already available on Apple’s iPad and tablets running Google Inc.’s Android software, as well as Roku and Amazon’s Kindle Fire.

Time Warner’s app currently features 300 channels thought it doesn’t fully replace its set-top box. The cable company had to secure streaming rights to allow viewing on digital devices, an increasingly important component of negotiations with the TV networks.

As portable devices become more popular, Apple has focused its TV strategy on promoting the iTunes digital store. ITunes sales -- which include apps and music -- surged 25 percent to $16.1 billion for the fiscal year ending in September.

Media companies that own TV shows and movies have been reluctant to sell content directly to online services such as Apple because it could harm the business of cable and satellite providers, whose licensing fees make up a substantial part of their revenue. Apple is attempting to address those concerns by partnering with cable companies.

The Apple-focused news website 9to5Mac previously reported the company was working on an updated Apple TV.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Reed Stevenson at rstevenson15@bloomberg.net; Nick Turner at nturner7@bloomberg.net

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