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Cable & Content Companies Can't Be Disrupted by Apple
CNBC ^ | Thursday, 16 Aug 2012 | 11:13 AM ET | By: Julia Boorstin

Posted on 08/16/2012 10:00:23 AM PDT by Swordmaker

It looks like Apple’s mysterious ‘AppleTV’ project may not be so revolutionary — or disruptive — after all.

After months of speculation that Apple will upend the TV business, allowing consumers to ‘cut the cord’ and buy TV channels a la carte, the latest word is that Apple will not threaten cable operators and their media giant partners. (Related Link: Ready for Apple TV?)

The Wall Street Journal reports the tech giant is in talks with cable operators to use its device as a set top box. If this is true, cable and media moguls must be breathing a huge sigh of relief. (Related Link: Apple in Talks With Cable TV Networks - Report.)

The Journal says that talks are about using “an Apple device as a set-top box for live television and other content.” Though nothing has been settled, Apple would offer a service from the cable operators, likely charging them a fee — it takes 30 percent of much of the content it sells. Ultimately Apple would offer a cool interface to seamlessly navigate TV and web content.

(If this is true) Bottom line: Apple is focusing on the box and not the delivery system because the content creation and delivery companies are just far too entrenched to be disrupted. The largest media company and the largest distribution company Comcast struck a ten year distribution deal earlier this year. That means it’s going to be virtually impossible for Apple to offer channels a la carte. These two giants (and their rivals) are committed to maintaining the status quo — selling huge bundles of channels. Even if Apple offered a huge amount of money for, say, just Disney Channel, or ESPN, they would be unlikely to break the model. Selling individual channels would mean a huge hit to both companies’ bottom lines.

The media giants and distribution companies say it’s not just in their best interest — it’s also in customers best interest — to maintain bundles. By paying for channels they don’t watch customers are subsidizing the smaller channels that not everyone would select. Disney CEO Bob Iger has explained to me, if everyone only paid for the 10 channels they thought they wanted, smaller channels wouldn’t have the financial support survive, and no one would get all the channels they wanted. Both Iger and Time Warner [TWX 42.60 -0.09 (-0.21%) ] CEO Jeff Bewkes have stressed to me that customers really want the choice of dozens or hundreds of channels and don’t realize just how narrow choices would become without bundles supporting the system.

Yes, an Apple TV could eat into cable carriers business — people could buy more video-on-demand through Apple, and perhaps less VOD from Comcast, DirecTV or Time Warner Cable. But media companies are wary of giving too much control to Apple — look at the disaster that befell the music industry when Steve Jobs controlled all transactions.

So we can expect media companies to drive a hard bargain with Apple, to prevent it from securing a monopoly on video on demand, and to protect their lucrative relationship with cable carriers.


TOPICS: Business/Economy; Computers/Internet; Music/Entertainment; TV/Movies
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1 posted on 08/16/2012 10:00:26 AM PDT by Swordmaker
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To: ~Kim4VRWC's~; 1234; Abundy; Action-America; acoulterfan; AFreeBird; Airwinger; Aliska; altair; ...
AppleTV may not be able to offer ala carte channel choices—PING!


AppleTV Ping!

Please, No Flame Wars!
Discuss technical issues, software, and hardware.
Don't attack people!
Don't respond to the Anti-Apple Thread Trolls!
PLEASE IGNORE THEM!!!

If you want on or off the Mac Ping List, Freepmail me.

2 posted on 08/16/2012 10:02:54 AM PDT by Swordmaker (This tag line is a Microsoft insult free zone... but if the insults to Mac users continue...)
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To: gortklattu

Thanks to GortKlattu for the heads up...


3 posted on 08/16/2012 10:04:50 AM PDT by Swordmaker (This tag line is a Microsoft insult free zone... but if the insults to Mac users continue...)
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To: Swordmaker
smaller channels wouldn’t have the financial support survive

You mean the channels nobody watches anyways...

4 posted on 08/16/2012 10:07:57 AM PDT by Domandred (Fdisk, format, and reinstall the entire .gov system.)
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To: Swordmaker
As part of our going Galt two years ago, my wife and I terminated all cable/satellite service and now get all our TV over the air. We buy or rent the movies we want to see, and get everything else off the Internet (DSL). We're saving a ton of dough and only miss seeing a cable program every once an a long while.

Well worth the trade.

The only way I'll ever come back to any kind of subscription TV service is on an ala carte basis, but we're in no hurry.

5 posted on 08/16/2012 10:08:16 AM PDT by LaserJock
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To: Swordmaker

It still baffles me why Apple hasn’t bought out Disney/ABC and their huge media empire. Lord knows, they have the cash on hand to do it. They could put a lot of pressure on the rest of the market to go with them by using one of the four main networks (and its valuable cable networks like ESPN and Disney channel) to set the standard.


6 posted on 08/16/2012 10:10:07 AM PDT by kevkrom (Those in a rush to trample the Constitution seem to forget that it is the source of their authority.)
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To: LaserJock

I got a jailbroken apple tv2 and I can watch basically ANYTHING I want for free (After spending 170$ for atv2)I see they are getting more pricey as people catch on. Only the apple 2 has been jailbroken so far. I suggest FReepers check into it. I LOVE MINE!!(link for search on ebay.)

http://www.ebay.com/sch/i.html?_trksid=p5197.m570.l1311&_nkw=jailbroken+apple+tv+2&_sacat=0


7 posted on 08/16/2012 10:23:19 AM PDT by NCDave (AKA, "That idiot over there")
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To: Swordmaker

A la carte content will be the death of some cable channels. I can’t wait. If MSNBC weren’t a part of a “package” it wouldn’t be on my TV, ever. Same with CNN, Headline News, Bravo and TLC. Oh, and MTV and BET (I must be racist). Bundled programming is like the Eurozone, where some companies work hard and make money to support other companies who do little or nothing for the actual bottom line.

Really, a lot of cable programming is crap. The best channels are rerun channels. Hallmark has Little House on the Prairie and the Waltons, and is mosly wholesome, family-oriented and not outwardly anti-Christian. Comedy Central has a bunch of idiots who make a living by making fun of Republicans, Conservatives, TEA Party followers and people from the South. Cartoon Network has original cartoons, but they are all horribly drawn and show nothing of the quality that Warner Brothers and Hanna Barbera cartoons had. We are cheating our children with the cartoon crap of today.

The Sci-Fi channel is half commercials. And they changed the name to SyFy. I have always been a fan of the science fiction genre, abbreviated to sci-fi. I must be a fuddy-duddy because I don’t think that the new name is all that creatve. It reads like see fee to me. If they have any good programs, I will wait until the next year and get them on Netflix.

In fact, most cable channels are nearly half commercials. They take a one-and-a-half-hour theater movie and pad it with enough commercials to fill a three-hour time slot. I watched Jurassic Park on the DVR and I was frikkin po’d at how many commercials I had to skip past to see the movie. In one part, 11 thirty-second spots.

I got suckered into signing a year contract with my cable company for the new channel lineup of HD channels and a free DVR, but I tell you what, when that contract ends, I am canceling cable and giving my money to Hulu and Netflix.


8 posted on 08/16/2012 10:27:04 AM PDT by webheart (King of the Run-On Sentence)
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To: LaserJock

It takes a little getting used to but it is very liberating, isn’t it?!


9 posted on 08/16/2012 10:29:55 AM PDT by rockrr (Everything is different now...)
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To: kevkrom

The Disney market cap is 90 billion dollars, which in theory Apple could afford in March when they had 100 billion on hand but you generally don’t buy a company for just their market cap. If they wanted to do that sort of thing much better to go for Viacom (26B) or to have beaten Comcast to the NBC/ Universal deal (13B). The fact that they didn’t shows they don’t actually want to be in that end of the business, they’re gunning for Netflix’s end of the business, cheaper entry, less hassles with government entities.


10 posted on 08/16/2012 10:35:15 AM PDT by discostu (Welcome back my friends to the show that never ends.)
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To: webheart

That’s why a la carte will never happen. The cable networks sell bundles to the cable companies which force them to sell bundles to us. The networks will NEVER sell channels a la carte, so the companies can’t.


11 posted on 08/16/2012 10:37:16 AM PDT by discostu (Welcome back my friends to the show that never ends.)
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To: NCDave; Swordmaker
Dear Sir- This could of been done for a whole lot cheaper. Just so you know.

Apple TV and fire core =129 dollars and taxes.

http://firecore.com/atvflash-black

12 posted on 08/16/2012 10:39:48 AM PDT by johngrace (I am a 1 John 4! Christian- declared at every Sunday Mass , Divine Mercy and Rosary prayers!)
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To: johngrace

http://firecore.com/atvflash-black


13 posted on 08/16/2012 10:40:25 AM PDT by johngrace (I am a 1 John 4! Christian- declared at every Sunday Mass , Divine Mercy and Rosary prayers!)
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To: johngrace

http://firecore.com/atvflash-black


14 posted on 08/16/2012 10:40:25 AM PDT by johngrace (I am a 1 John 4! Christian- declared at every Sunday Mass , Divine Mercy and Rosary prayers!)
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To: discostu

That was Apple’s US cash on hand. They’ve got a ton more earned offshore that they don’t bring back in due to the tax laws.

It’s not just ABC/ESPN/Disney. That group owns or has significant interest in a lot other networks, plus radio, movie and music distribution, and publishing. If Apple wants to control the media market, they could hardly ask for a better place to start.

Plus, Apple (and specifically Jobs) has long had a good relationship with Disney, so that makes a merger/buyout idea make more sense for them rather than another media group.

Still... trying to figure out Apple’s strategies has been the bane of many a pundit, so if I’m way off base, at least I’ve got a lot of company. ;)


15 posted on 08/16/2012 10:41:48 AM PDT by kevkrom (Those in a rush to trample the Constitution seem to forget that it is the source of their authority.)
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To: NCDave

The Apple 2??? Dude, I had one of those in 1980!


16 posted on 08/16/2012 10:45:40 AM PDT by Alas Babylon!
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To: johngrace

I see, but it does requires unit to be jailbroken first. I also don`t see NAVI-X in the software which is key to my ability to access the sites for movies and other content.


17 posted on 08/16/2012 10:46:22 AM PDT by NCDave (AKA, "That idiot over there")
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To: NCDave

Actually it`s NAVI-X with XBMC software together.


18 posted on 08/16/2012 10:50:52 AM PDT by NCDave (AKA, "That idiot over there")
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To: NCDave

Here`s a link for the NAVI-X home page also...

http://website.navi-x.org/


19 posted on 08/16/2012 10:53:46 AM PDT by NCDave (AKA, "That idiot over there")
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To: kevkrom

I’m not saying they wouldn’t get their money’s worth, just that it’s a very expensive company to buy even with Apple’s cash on hand, and if they really wanted to get into that end of the business they could get into it for a lot cheaper and with a lot less complications. It’s a rough business to get into because now you have to deal with FCC requirements, the whole affiliate structure, the cable company deals, and of course 2 dozen “different” movie companies. It would be paying a lot of money to suddenly enter a lot of different business worlds you have no experience in, and enter them in a big way. If they wanted to go that route a smaller company to buy involves not only dramatically smaller cash out lay but a lot fewer headaches, and if they proved to be good at it THEN they buy Disney.


20 posted on 08/16/2012 11:22:47 AM PDT by discostu (Welcome back my friends to the show that never ends.)
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To: discostu

Fair points. The only riposte I can think of is that their existing relationship with the Disney folks might make a buyout more like a merger, where Apple would leave most of the Disney/ABC folks in place (at least at first), but set general direction from Cupertino rather than Anaheim.


21 posted on 08/16/2012 11:28:29 AM PDT by kevkrom (Those in a rush to trample the Constitution seem to forget that it is the source of their authority.)
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To: Swordmaker

APPLE TV has never made any sense to me.. I’m honestly suprised the product hasn’t been killed yet.

Ala Cart purchasing would have given it a reason to exist, but honestly I just don’t get it.

I can BUY/RENT a movie from Apple Itunes, at far higher prices than Netflix or even my local cable provider... What’s the point?


22 posted on 08/16/2012 11:31:03 AM PDT by HamiltonJay
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To: HamiltonJay

We buy shows from iTunes for the Apple TV. The shows have no commercials. Do Netflix shows have no commercials. Hulu shows commercials and doesn’t show the tv shows sometimes for a whole month after airing.


23 posted on 08/16/2012 12:23:26 PM PDT by Excellence (9/11 was an act of faith.)
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To: LaserJock

I decided to cancel my cable too. About the only station I watched was Fox news, and when they went the way of screaming heads, I decided it was a waste of time.

Talk radio and the internet (FR) give me all the news I need, and there are always clips of the really good stuff. Someone puts them up on YouTube.

And, important hearings from C -Span are always available on the net.

Time to send a signal to the coastal “mediots” shoving their agendas in our eyeballs.

How about a FReeper boycott of cable/satellite? Maybe many thousands of letters, all canceling on a certain date would get their attention


24 posted on 08/16/2012 1:20:54 PM PDT by jacquej
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To: HamiltonJay

Maybe you didn’t know - I get netflix on my Apple TV, and pay a set fee each month (8 or 9$) if I remember right.

I can watch without commercials, all the better TV series I can handle. And, there are really good shows from England available...


25 posted on 08/16/2012 1:25:25 PM PDT by jacquej
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To: kevkrom

I’m hearing that Disney attendance is down; the tix are EXpensive and the economy is starting to get to them.

If so, I wouldn’t buy their stock. Apple may be thinking the same thing.


26 posted on 08/16/2012 1:39:11 PM PDT by gortklattu (God knows who is best, everybody else is making guesses - Tony Snow)
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To: discostu

Apple builds hardware.
That’s what they do.
Everything else is provided just to facilitate selling hardware. They may make a sizable profit on non-hardware sales (iTunes), or sink a lot of money into services (iCloud), but it’s all just to feed back into promoting more hardware sales.
Apple doesn’t want to move into large-scale content creation. It’s just not what they do. There’s too much distracting overhead to make it happen, effort which doesn’t translate well into more hardware sales.
Better to build an Apple TV ecosystem which will have content creators beating down the door. iOS 6 may very well have an Apple TV App Store; give users the choice of app “channels”, and you’ll see Disney & Viacom & NBC & near everyone else rolling onto the platform almost overnight. Better to create a “build it and they will come” environment than to pay billions to force them to; you start paying and they’ll hold out for more, but give users a choice and providers will climb over each other to get there.


27 posted on 08/16/2012 1:40:33 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: gortklattu

Disney is so dated, they just renamed “Tomorrowland” to “Yesterdayland”.


28 posted on 08/16/2012 1:40:41 PM PDT by dfwgator
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To: ctdonath2

I expect Google to try to become a player eventually.


29 posted on 08/16/2012 1:42:45 PM PDT by dfwgator
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To: dfwgator

Google TV crashed and burned.

Google _is_ getting into the “Cable TV” market, starting in Kansas City with gigabit Ethernet and a big TV-content push. I expect the fast internet part will do well, but the “TV” part will give way to streaming services (Netflix, Hulu, etc.).

Google’s “thing” is ads. Whatever they can do to deliver maximum-value ads, mostly via data mining, they will. They don’t care _what_ that data is, just that they can get at it and mine it; if viewers want NBC shows Google will find a way to deliver & monitor ‘em, and if viewers drift away from that toward Netflix-type sourcing then that’s OK too. If getting data means developing self-driving cars so Google can watch where they’re going and give them more time to look at ads, so be it.

Buying into the content creation market requires dedication to content creation. Apple and Google don’t care about that; Apple just wants to sell you hardware and Google wants to put ads in your field of view ... _how_ that happens, neither wants to get locked into.


30 posted on 08/16/2012 1:58:20 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: Excellence

Netflix has no commercials. $8/month all-you-can-watch. Only caveat is their library, albeit huge, tends to not have the latest still-high-value content (there’s iTunes and RedBox for that), and some of the titles come and go (and come, and go) depending on licensing status. There’s more than enough to watch - commercial free.


31 posted on 08/16/2012 2:05:03 PM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: gortklattu

The theme parks are an insignificant percentage of the Disney money making factory. They just produced the 3rd highest grossing film in US history (The Avengers), financially they’re doing fine.


32 posted on 08/16/2012 2:08:58 PM PDT by discostu (Welcome back my friends to the show that never ends.)
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To: HamiltonJay

I think that ATV is, at present, a foot in the door sort of thing. And even at $99, they’re probably still making money off it.

Apple plays the long game.


33 posted on 08/16/2012 4:08:35 PM PDT by AFreeBird
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To: kevkrom
It still baffles me why Apple hasn’t bought out Disney/ABC and their huge media empire.

It wasn't really necessary with Jobs on the Disney board and being the largest single private shareholder by far, and with his Pixar folks running much of the Disney empire.

34 posted on 08/16/2012 4:21:57 PM PDT by antiRepublicrat
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To: NCDave
I truly do not know what is involved. Just saying. I got the fire core. It is legal Since that case a couple of years ago but I went back to regular apple tv.

What is great about the apple is you can mirror iPod , iPhone and iPad . And now the apple Mac computer in the living room to the back bedroom . It's very good. So technically it does anything that the Internet does on any of those devices and computer. It is awesome at the end of the night.

Cheers !

35 posted on 08/16/2012 4:28:28 PM PDT by johngrace (I am a 1 John 4! Christian- declared at every Sunday Mass , Divine Mercy and Rosary prayers!)
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To: HamiltonJay

My Apple TV gets Netflix. Plus it’s the best device I’ve tried so far to stream my ripped DVD collection to the TV. It streams better than the XBox or PS3, and does it while making a lot less noise (actually, none) and using much less power.


36 posted on 08/16/2012 4:29:20 PM PDT by antiRepublicrat
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To: Swordmaker

Funny thing about keeping those bundles because you won’t make as much money via a la carte...when the dish/cable gets cut they get $0. I just ditched the dish because I was sick of paying for 98% of the channels that I didn’t want, or have time to watch. Got new TV specifically so I could get an Apple TV for the HD Netflix, iTunes, Hulu and anything else that comes down the pipe. Don’t miss it at all.


37 posted on 08/16/2012 4:34:40 PM PDT by Chipper (You can't kill an Obamazombie by destroying the brain...they didn't have one to begin with.)
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To: johngrace

Thanks for the link!

I just bought the ATv.


38 posted on 08/16/2012 4:59:13 PM PDT by Randy Larsen (Damned if I do, Damned if I don't. Damn it, I will!)
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To: NCDave

Link Bookmarked...Thanks!


39 posted on 08/16/2012 5:01:19 PM PDT by Randy Larsen (Damned if I do, Damned if I don't. Damn it, I will!)
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To: Randy Larsen

welcome...All of the apple functions are there. I use the netflix app since I have an account, but the XBMC with NAVI-X platform/program makes netflix not really needed. It Rocks. Just research it a little.


40 posted on 08/16/2012 5:46:11 PM PDT by NCDave (AKA, "That idiot over there")
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To: johngrace

You should check out putting the XBMC platform with navi-X on your unit. Ebay sells the software and instructions. Or you can send it to be done as well. It really powers up the AT2. Take care.


41 posted on 08/16/2012 5:50:43 PM PDT by NCDave (AKA, "That idiot over there")
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To: Swordmaker
The media giants and distribution companies say it’s not just in their best interest — it’s also in customers best interest — to maintain bundles.

Funny thing is, they have consistently failed, for 50 years that I know of, to ask their customers for their opinion!

I for one, however, view Apple's entry into the industry as an unmitigated disaster. The hallmark of Apple has always been to gouge the user. Without exception. Up til now, the public has always had at least one alternative choice.
Their entry into competing with the cable company cartel, from the customers' viewpoint is the choice of being eaten by a regular very large hungry shark, or a Great White.

Oh joy!

42 posted on 08/16/2012 6:09:33 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Swordmaker
The largest media company and the largest distribution company Comcast struck a ten year distribution deal earlier this year.

This seems like a rare education moment. What is the difference and the interaction between "media company" and "distribution company?"
Congress has made periodic feeble (over the last 40 years) attempts to break the monopolies which create the cable/media mafia; RICO material.

But magically, every time it goes nowhere.
I am just amazed that no one has managed to unravel the money paths to the payoff of the politicians. Pulitzer Prize material.

43 posted on 08/16/2012 6:34:11 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Swordmaker
The largest media company and the largest distribution company Comcast struck a ten year distribution deal earlier this year.

This seems like a rare education moment. What is the difference and the interaction between "media company" and "distribution company?"
Congress has made periodic feeble (over the last 40 years) attempts to break the monopolies which create the cable/media mafia; RICO material.

But magically, every time it goes nowhere.
I am just amazed that no one has managed to unravel the money paths to the payoff of the politicians. Pulitzer Prize material.

44 posted on 08/16/2012 6:34:45 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Domandred
smaller channels wouldn’t have the financial support survive
You mean the channels nobody watches anyways...

Oh yeah.
Evangelical, shopping, gay channels, Al Gore channel, BET and the Oprah channels...

45 posted on 08/16/2012 6:45:57 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Randy Larsen
Your Welcome! Remember you can always go back by reset.

Just follow instructions carefully. I think you need a micro usb to usb computer to itunes. It might of changed.

46 posted on 08/16/2012 9:41:10 PM PDT by johngrace (I am a 1 John 4! Christian- declared at every Sunday Mass , Divine Mercy and Rosary prayers!)
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To: gortklattu

Attendance at Disneyland and California Adventure in Anaheim has never been higher than this summer.


47 posted on 08/16/2012 10:12:23 PM PDT by Blue Ink
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To: Blue Ink

I have to be careful about what I hear. Thanks.


48 posted on 08/16/2012 10:54:39 PM PDT by gortklattu (God knows who is best, everybody else is making guesses - Tony Snow)
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To: gortklattu
I’m hearing that Disney attendance is down; the tix are EXpensive and the economy is starting to get to them. If so, I wouldn’t buy their stock. Apple may be thinking the same thing.

While that is true, theme parks aren't where the major profits come from. I do believe the single most profitable division of the whole empire is ESPN.

49 posted on 08/17/2012 4:31:07 AM PDT by kevkrom (Those in a rush to trample the Constitution seem to forget that it is the source of their authority.)
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To: Excellence
We buy shows from iTunes for the Apple TV. The shows have no commercials. Do Netflix shows have no commercials.

Netflix is commercial-free. However, I believe the major advantage of iTunes or Hulu over Netflix would be that new episodes are available the day after they originally air, whereas on Netflix, you wait until they're available on DVD.

So, if you're trying to keep current on stuff that's showing right now, you're better off going the iTunes or Hulu route, but for catching up on older shows, Netflix is the better option.

For me, when my current commitment with DirectTV expires, I plan on cutting off cable/satellite altogether and going with some form of iTunes/Netflix/Hulu plus of course, my own DVD library. Looking at the current options, either the AppleTV or Roku would likely serve, but I'm still far enough away from actually doing anything that there's no point making detailed plans yet.

50 posted on 08/17/2012 4:38:39 AM PDT by kevkrom (Those in a rush to trample the Constitution seem to forget that it is the source of their authority.)
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