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SNAGS ASIDE, NETS ENAMORED OF 'NET BROADCAST, CABLE OUTLETS ROLL OUT NEXT GENERATION OF ONLINE EXPERIMENTS

By Published on .

The rush to cyberspace by cable and broadcast TV networks last year seemed as fervent and competitive as the battle for station affiliates.

But the networks' reasons for exploring new media are as diverse as the interactive products they've created.

"The networks are staking their claims in interactive media," said Jack Myers, president of Myers Communications, Parsippany, N.J. "They may not know what the values of those claims will be, but it's better for them to have a position in it than not."

Each of the Big 3 networks, Fox and dozens of cable channels took their first test drives on the information highway in 1994.

Their initial forays produced a mixed bag of offerings ranging from David Letterman's Top 10 list to a 30-second McDonald's commercial that took nearly an hour to download.

Now that they've gotten their feet wet, network programmers are embarking on a second generation of interactive content that promises to be more sophisticated.

"Let's face it, the jury is still out. Nobody knows if this is going to be a business for the networks in any aspect of it," said Bruce Maggin, exec VP of Capital Cities/ABC Multimedia Group. "But we are encouraged by the appetite both the distributors and the consumers have shown for our content."

And despite fierce rivalries, the networks are taking pointers from each other. CBS, for example, incorporated elements of ABC's interface on America Online into its own World Wide Web site.

"We're all learning from each other," said George Schweitzer, exec VP-marketing and communications at CBS, which is on Prodigy; NBC and ABC are on America Online.

ABC's plan is to create new revenue streams by extending the network's products into new media. Fox parent News Corp. owns the online service Delphi, but Fox has been the least ambitious of the broadcasters and claims it sees its role for now primarily as a content provider.

The business goals also vary for cable networks. ESPN's area on Prodigy marks an ambitious effort to link a top-notch brand name to the service's sports content. Smaller networks like America's Talking or the Sci-Fi Channel, meanwhile, are going online to promote themselves to a wider base of potential viewers, many of whom don't even have access to the cable channels yet.

The one dilemma facing each of the networks is figuring out how to make money in new media. The answer for many will be to have advertisers foot the bill.

ESPN's planned World Wide Web site will offer information free to consumers, but the network is seeking a half-dozen or so advertisers willing to fork over $1 million each to participate.

CBS and NBC have not yet sold their online areas as direct ad buys, but have packaged them as promotion marketing extras for big advertisers with the goal of getting them to commit a larger share of their budgets to the networks.

The two networks also point to the audience promotion and research value of their online services.

"We've tried to find a series of ways to test things to learn what is of value and whether it is a programming value, a promotional value or, ideally, a financial value," said Mark Harrington, CBS exec VP-new media. "But we have to remember where we come from-the television business."

The networks aren't making much money from the commercial online services, which typically offer media partners a portion of subscriber usage fees. ABC, however, claims its area on America Online is in the black, despite devoting nearly a dozen network staffers to the creation and maintenance of the service.

"We've learned a lot about how to get it done internally. And how to get it done efficiently and economically," Mr. Maggin said. "Online is not only producing revenues, but is profitable for us. And that is not including any advertising."

He said the network's Super Bowl site on AOL set an online record, with more than 250,000 visits. ABC hopes to draw a big crowd to an AOL area devoted to the Academy Awards that will enable users to participate in an online Oscar poll.

To date, ABC has not incorporated network advertisers to the extent that NBC and CBS have, but Mr. Maggin said that will soon change.

Interactive TV is either the holy grail or the biggest threat to the networks. But interactive TV trials to date have involved only limited amounts of network TV fare because the networks still own only a small amount of their programming. That will change with the repeal later this year of the financial interest and syndication rules.

Mr. Harrington noted that CBS was able to develop its first CD-ROM title-a Vietnam War disc produced jointly with The New York Times-because it owns its own news archives. He predicted that as the networks gain more ownership of their shows, they will more aggressively exploit interactive platforms.

All the networks are prepared to participate in some way in interactive TV. CBS and its rivals are involved in Discovery Communications' Your Choice TV and Bell Atlantic Corp.'s Stargazer. Cap Cities, meanwhile, is involved with several testbeds and plans to launch new initiatives later this year with cable and phone companies.

In the meantime, the CD-ROM market seems to be shaping up as the next battleground for the networks.

NBC's first foray into CD-ROM publishing did not come from the peacock network but from its sister cable channel CNBC. "Your Portfolio Interactive," a program that enables users to plan their mutual fund investments, was released last year.

"It's done very well," said Martin Yudkovitz, senior VP-strategic development and NBC Multimedia, a unit formed last November to step up NBC's interactive media businesses.

Mr. Yudkovitz declined to say how much revenue the CD-ROM generated. But he said NBC is starting to look at interactive media as not just a promotional tool, but an opportunity to make money.

NBC Online, for example, will soon be radically transformed into a new business that will rely on consumer and advertiser revenues. The service is currently carried on AOL and NBC parent General Electric Co.'s GEnie.

"NBC is going to alter its model and its presence online dramatically this year. And that will result in dramatically increased presence and a service of great value that we think consumers will be willing to pay for and that we think that advertisers will be even more eager to be part of," said Mr. Yudkovitz.

Meanwhile, he noted that NBC has expanded into other new-media businesses, including NBC Desktop, a desktop computer news service for financial professionals; and NBC Data Network, a new service that uses a previously unused portion of the broadcast spectrum to transmit interactive data services such as group faxing.

Cap Cities/ABC Multimedia is also aggressively perusing new-media businesses and has launched a bevy of joint ventures with such companies as Electronic Arts and Glencoe/McGraw-Hill to facilitate them.

If the fledgling Fox network seems conspicuous by its relatively low profile, that's no accident.

Fox has a site on Delphi and has published interactive programming via News Corp.'s Kesmai interactive software unit, but the network does not yet consider interactive media a real business.

"The key to our approach is that we have to remember first that we are a content provider," said Ted Hoff, senior VP-Fox Interactive. "We make great feature films and television shows. We should focus on the content we do best. The technology then has to draw from that."

He added: "We don't want to be out in front of the technology, but we are prepared and poised to deploy content as the technology works itself out and as consumers demonstrate an interest in it," he said.

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