New TV Riches

By Barbara Kiviat

Reruns and rentals apparently aren't enough for TV lovers these days. Consumers shelled out more than $2 billion last year to purchase DVDs of shows ranging from Seinfeld to The Simpsons to Sex and the City. And the TV industry is loving it. Historically beholden to fickle ratings and ad spending, studios are reveling in a new revenue stream for which costs are low (old show, new box) and profit margins high--as much as 50%, according to Merrill Lynch analyst Jessica Reif Cohen. By 2008, Cohen projects, the business will grow to $3.9 billion annually. The biggest beneficiaries: Time Warner, which owns HBO, Warner Bros. and New Line (and this magazine); Viacom, with its Paramount and MTV divisions; and 20th Century Fox, which is mostly owned by News Corp. Big-name actors like James Gandolfini of The Sopranos and Dave Chappelle of Chappelle's Show are grabbing for a bigger piece of the DVD pie during contract negotiations. --By Barbara Kiviat