Web Looks Sticky for Networks

The big TV networks are juicing up online programming in a bid to shore up ad sales, but the Net is a long way from replacing the tube on their bottom lines.

Each network elaborated on interactive strategies at last week's Upfront presentations. Much time was spent outlining for media buyers and marketers how network programming would be made available on the Internet.

GE's (GE Quote - Cramer on GE - Stock Picks) NBC touted its 360 Digital plan, which features "mobisodes" -- as in mobile episodes, or teasers for a show -- and a new broadband comedy channel.

At News Corp.'s(NWS Quote - Cramer on NWS - Stock Picks) Fox, Interactive President Ross Levinsohn spoke for half an hour on the company's Web plan. Disney's(DIS Quote - Cramer on DIS - Stock Picks) ABC has free ad-supported shows, and CBS (CBS Quote - Cramer on CBS - Stock Picks) pushed CBS.com's relationships with Google(GOOG Quote - Cramer on GOOG - Stock Picks) and Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks).

There is little doubt that the media landscape is changing rapidly to encompass new technologies. But selling TV ads remains much more profitable for the networks than selling the same programs online, as a cost-per-thousand-views (CPM) comparison demonstrates.

A primetime broadcast show at a typical $20 to $25 CPM generates 40 cents to 50 cents in revenue per viewer. An online viewer, with many fewer commercials per viewing, generates 10 cents to 20 cents. Deduct the cost of streaming video, and the revenue picture darkens by several cents more per viewer.

Meanwhile, the talent guilds in Hollywood are angling for profit participation on any online ad revenue the networks see. Those negotiations are still to be determined, but the percentage promises to be another significant slice of the pie. A producer like West Wing's Aaron Sorkin or Boston Legal's David E. Kelley could easily be looking for a 10%-plus cut.

So, why are networks going to such lengths for so little? To hold on to revenue as programming moves into new channels, regardless of the incremental hit.