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Apple's Strategy For Disrupting The Cable TV Industry

|Includes: Apple Inc. (AAPL)

As every investor knows Apple has spent several years trying to break into the Cable TV business with limited success. The obvious problem has been the reluctance of the established players in the Cable business to make deals with such a potentially dangerous competitor. The cable companies will defend their rights to their programming to their collective last breath. While Apple and many other 'outsiders' would like a complete a la carte cable model it cannot happen until the outsiders have enough leverage to force change.

I believe that the fastest, most efficient for Apple to gain that leverage would be to combine forces with Disney which through its' ESPN subsidiary would likely control 60-70% of the pay per view segment of a disrupted cable industry. With control of all that sports programming Apple could bargain with the cable companies and networks for access to their programming in exchange for its offerings.

For example, if Comcast wanted to offer a MLB pay per view package to its customers that included games contracted to ESPN it would have to offer Apple/Disney deals on shows it controls.

Such a deal would open the floodgates to many more such deals and finally give consumers the type of product they have wanted for decades.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL, DIS over the next 72 hours.