One thing they could do is buy their way into Hollywood. Think about it for a second. Today, Apple could literally buy Time Warner ($38 billion market cap), Viacom ($29 billion), and Dreamworks ($1.6 billion) combined, and still have $30 billion left over. If it waits a few more quarters it could snap up News Corp ($49 billion) as well. Only Disney, which is worth $70 billion, would take a while longer to save up for.
But it is very unlikely Apple would just snap up all the major media companies. It would be a post-acquisition mess, not to mention the antitrust issues it would raise. No, all Apple needs to do is take a few billion dollars of that cash and start licensing the rights to stream first-run TV shows and movies. It could easily compete with cable. It needs to compete with cable if it truly wants to build a TV replacement.
Food for thought: When you have that much money on hand, you can actually think of crazy things like this. Actually, we have a better idea: Spend some of that money improving your factory standards, Apple.