Looking at this another way...
I'm starting to realize that if Apple wants to compete, then they'll have to actually become a TV provider, no different than Dish or DirecTV. Why are they trying to negotiate deals with cable companies? And why are they trying to negotiate with the creators for show content to download like a HULU or NetFlix?
No, the key to their success is to simply directly compete with the Cable Companies or Dish/Direct by being the first internet TV provider. The difference? Channels a la carte. $1.29 a channel for tier 1. 99 cents a channel for tier 2, and probably $2 a channel for the HBOs, etc. Other specialty sports packages can simply be priced competitively like dish or even cable does. Like a pay per season type thing.
I think at those rates, the cost for 50 good channels you actually want would cost about the same as it ever does. But you wouldn't get all the crap. And if you wanted the other 200 channels you don't need, then it would cost you more. The key is to get the providers to allow them to purchase these channels at the right price to make that happen.
THEN - you've got a service that everyone wants and you sell the hardware to make it happen. TVs, boxes, and of course all the content also available with iPad/Phone app. AND, like Dish, any show you want DVR'd will simply be in the cloud for you to view on your iPad or iPhone or AppleTV. Dish has a great app for this. You can watch a bunch of LiveTV on your phone or pad (anywhere I think). I think this could definitely revolutionize television. Still live and scheduled. Still available via download after it airs. And it also opens it up to little podcast channels like the Roku has becoming available. Local time slots for commercials could be filled with ads that are deemed for you based on your interests and watching prefs. THAT might be the argument to win over the content providers. If ads can be served up to more success, then they can charge more for the ads. The whole thing could be the iTunes for the TV industry. Problem is, the TV industry isn't in trouble. The music industry was.
But all it takes is for one deal to be made. Get Time Warner to allow them to stream their networks for a price. If they sell their content to Dish, to Comcast, to Charter, to DirecTV, then why not Apple? My guess is they want to bundle channels in a way that wouldn't be cost effective for Apple. And this is what the negotiations are about. Apple probably wants to give them a cut for each registration, instead of paying up front like Cable and Dish probably do. Whatever it is, it's a new pricing model and I'm guessing it has to do with a la carte.
Within a year or two the cable companies and satellite companies would fall in line offering the same a la carte services, but with poor interfaces and poor integration since they don't actually make TVs or iPads. Google will come out with the same service and have cheaper boxes with lesser interfaces for awhile.