Scottie: "I know we got into a fight last night, but drinking before 10am, is that really the answer?"
Harvey: "It is on Mad Men. Who does that guy think he is?"
Catching up on USA's Suits, this line of dialogue in the season finale "No Way Out" hit my ear. Why shouldn't Harvey Specter watch TV, and why shouldn't he make a reference to it in his everyday speech?
No reason on either count, but it illuminates that it's a relatively uncommon occurrence. As a kid I remember thinking that there must be a rule that TV characters don't watch TV the way we do, or else they would talk about it more. (Truly I was destined to work at The Paley Center for Media.) It was a first inkling of understanding the conventions & boundaries of the fictional worlds of TV.
The examples that I'm looking for are not meta-references and the series built around them like The Simpsons and Family Guy. (Oh, look what they have in common: adult series animation.) Nor do I mean characters that we see watching TV, like Tony Soprano and his History channel or Don's recent TV watching while he's spiraling down. Nor do I mean when TV characters meet each other, a la the Law & Order franchise crossovers, roping in their colleagues down in Baltimore, Homicide: Life on the Streets, or the CSI interstate meet-ups.
I mean references in "natural" conversation between characters, like the scene with Harvey & Scottie.
The the Darrins, the Beckys, and the Lois Lanes
The first time I remember hearing a direct TV-watching reference was in Roseanne. I didn't watch it religiously, but I caught the 1993 episode Homecoming, when daughter Becky returned after a long plot-related absence. And when she came back, it was Sarah Chalke in the role, not Lecy Goranson.
There was a tag scene over the closing credits, in the Conner living room, with the family watching TV. You hear the unmistakable music from Bewitched, and then this dialogue:
Roseanne: "I cannot believe that they replaced that Darrin."
Jackie: "Well it was a hit show, they knew they could get away with anything."
Becky: "Well, I like the second Darren much better."
Yes meta, because of the actress switch, but also natural that a family watching the series together would note the strange change in actors with no explanation.
Before the Beckys and the Darrins there were the Lois Lanes. Phyllis Coates played the role for the first year of the series, replaced by Noel Neill. Both were put into syndication in the 1970s, which is why I saw both. But I've never heard a reference to it.
The Big Bang Theory has lots of references to TV, particularly the entire Star Trek franchise, Battlestar Galactica, Babylon Five, and other classics in the nerd cannon. But dialogue in the recent "Relationship Diremption," April 10, 2014, written by Chuck Lorre, Eric Kaplan & Steve Holland, was different. It was more casual to friends watching hit shows, not plot points specific to their identities.
Sheldon responds to why he hasn't proven string theory yet: "I have a lot on my plate. We're in a Golden Age of Television."
Sheldon: "Am I wasting my life on something that can't be proven?"
Wolowitz: " Maybe, but how great is Game of Thrones?"
Sheldon: "I couldn't sleep."
Penny: "I told you those Walking Dead pillowcases were a bad idea."
These casual references simply illustrate that the characters watch TV, not a meta "wink wink, nod nod" (thank you Monty Python). Which could be seen as the next step in the evolution of TV's narrative journey.
I can't find the citation, but I remember someone pointing out that Samantha Steven's pregnancy in Bewitched was the first time that episodic TV had a connecting thread. Hill Street Blues was the first time that nightime prime time used the multiple, interconnecting, long story arcs of soap operas. And that lead to the glories of The Sopranos, The Wire, Deadwood, etc.
And decades later now TV characters are free to watch TV show with no meta overtones. They continue to become more and more autonomous in the most interesting ways. Hmm.
Here's a great fan video of TV & film characters reacting to the Purple Wedding of Games of Thrones, because of course everyone watches it.