Bernstein's Sacconaghi Lists Four Thoughts for Investors on Apple (AAPL) TV Service

Bernstein analyst Toni Sacconaghi weighed in Apple (NASDAQ: AAPL) following reports from the WSJ the company is planning to offer an over the top television service this fall with about 25 channels, including content from ABC, CBS and Fox (but not NBC) for $30 to $40 per month. Sacconaghi offered four thoughts for investors, however, the analyst was not overly sanguine.

1. We have seen this movie before. Apple introduced its Apple TV offering in 2007, and has sold 25M units to date. CEO Tim Cook has repeatedly noted that television was an area of "intense interest" for the company, and Apple has been trying for more than five years to ostensibly bring to market a more flexible TV offering...
2. Is this time different? Maybe, but the issues remain the same - Last week, at Apple's Watch introduction, the company reduced the price of its Apple TV from $99 to $69 and announced that it would initially exclusively offer HBO for $14.99 on Apple TV and iOS devices. Perhaps equally importantly, CEO Tim Cook stated that "Apple would reinvent the way you watch TV – and this is only the beginning...
3. We see Apple's potential differentiation as being ease of use and cross device play, including time
   shifted/DVR capability. We suspect that any over the top offering that Apple brings to market would not be unique over the longer term, given studios' likely desire not to give Apple unique control and to extend their reach as broadly as possible. That said, we suspect that Apple's potential for differentiation will be its ease of use and its integration with other over the top offerings (iTunes, Netflix, Hulu, etc.)..."
4. If successful, a television service would be revenue accretive to Apple and GM dilutive, but still largely immaterial (<1% of company profits for every 10M subscriptions), given Apple's immense revenue base today. That said, the service's principal value would likely be enhancing Apple's ecosystem.

The firm maintained an Outperform rating and price target of $135 on AAPL

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $124.95 yesterday.

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