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What Would An Apple Pay TV Service Look Like?

On Jan. 27, Apple is expected to unveil a tablet computing device with a heavy focus on media content, including digital versions of newspapers and magazines. It may also include an enhanced iTunes store with a subscription service to access television programs-a prospect fueled by reports that Apple has broached the idea with CBS, Disney-ABC and other networks.

Just as Apple completely reshaped the economics of the music business when it released iTunes in 2001, an Apple subscription-TV service could upend an already challenged broadcast model as well as incumbent pay-TV platforms:

Cord-Cutters Welcome: In today’s economy, dumping an expensive $70 a month cable service for a cheaper option with only the shows and channels you want looks might attractive. For cable networks, however, that could look an awful lot like a la carte, a model that cable bundlers perennially argue would put smaller channels out of business.

Retrans, Retrans, Retrans: With broadcast networks now looking to dip their beaks in the retransmission-consent pool, offering programs on an Apple TV service would undermine their efforts to extract per-subscriber fees from MSOs. If anyone with a broadband connection could pay a modest fee to access, say, Glee, Fox likely couldn’t have squeezed Time Warner Cable for upwards of 75 cents for each of its 14.6 million subs.

Affiliates Would Flip: Network affiliates still hold a ton of power. They didn’t like it when ABC led the pay-per-download parade of primetime shows on iTunes, and they won’t like a subscription service that encourages time-shifting and yanks more eyeballs away from local late news.

Of course, such a service is largely theoretical at this point, and many questions remain: Who would be on board? What would it cost? Would the programming selection be broad enough to offer viewers real value? Will there be ads? How about the revenue share with Apple?

All of which suggests that a new Apple TV service would have substantial hurdles. But given the unexpectedly game-changing effects ushered in by iTunes, we’re anxious to find out if TV will be on the menu of what Apple is billing its “latest creation.”