Brave New TV Land

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In sheer buzz alone, new media are showing some promising results. After ABC's hits Lost and Desperate Housewives were downloaded on iTunes, their Nielsen ratings went up 17% and 18%, respectively. And although hard figures aren't available, NBC executives credit iTunes with helping The Office become a bona fide hit. (Switching it from Tuesday to Thursday night might have helped too.)

The challenge facing these new-media endeavors is for networks to expand their audiences and capture new viewers without damaging their core business. After all, the average American from 18 to 49 years old still watches 41/2 hr. of television daily, says Morgan Stanley managing director Richard Bilotti, while the same demographic stays online each day for only 57 min. Larry Kramer, digital president for CBS--among the most active networks in the new-media space--finds it's "a real balancing act" to experiment aggressively without jeopardizing the Eye's stately brand. "A lot of this activity is meant to support the mother ship," he says.

But the mother ship could soon find itself under attack on several fronts. Network affiliates, the regional business partners that carry and promote the shows to local viewers, want a piece of the new action. "This fight will get very real very quickly, and there'll be a court case within six months over this," predicts Rafat Ali, owner of the industry-news site paidContent.org One struggle brewing pits CBS against its affiliate in Raleigh, N.C., WRAL, which wants to stream prime-time shows live, then sell downloads on its own website, limiting access geographically to Raleigh viewers. Production companies and studios that provide shows to networks pose another potentially thorny family feud. Networks haven't figured out yet how to split the pie, which is why the Big Four have so far placed only their wholly owned shows on off-network platforms.

"Nobody has a deal yet," admits Wolf, explaining that he and other major producers must take a leap of faith to cross TV's digital divide. "I have no idea what this will be worth, but I suspect it's the next big thing." Or in the case of his son's pocket Christmas present, the next big small thing.