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Public Broadcasters' Commercial Ventures Draw Scrutiny

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Count von Count, the purple Muppet vampire who loves to tally numbers on "Sesame Street,'' must be keeping busy around the offices of the Children's Television Workshop.

Last year, the nonprofit producer of "Sesame Street'' and other educational-television shows took in more than $28 million from the licensing of such characters as Big Bird and Bert and Ernie for consumer products and services. The New York City-based organization saw an additional $57 million from sales of its popular magazines, videos, and computer software, and from international versions of the popular children's show.

To many observers, the C.T.W. is an admirable example of a nonprofit entity that has successfully lessened its reliance on government and charitable contributions and become highly self-supporting.

But if that is the case, why have some critics been grumbling as loudly as Oscar the Grouch about the C.T.W.'s finances? The answer is that even though "Sesame Street'' itself has not received any federal funding since 1982, other C.T.W. projects do receive relatively modest public grants, either from the federal government directly or through the Corporation for Public Broadcasting.

That angers critics of public broadcasting such as Laurence Jarvik, a scholar at the Heritage Foundation in Washington.

"They have all this elaborate licensing and merchandising and this big endowment which they could use instead of government funding'' for new projects, he said last week.

Scrutiny From Conservatives

The entire public-broadcasting system has been under intense scrutiny in recent months, especially from political conservatives who charge it with a liberal bias or who object to federal funding for a service they argue has outlived its original purpose.

The reauthorization bill for the C.P.B., the private, nonprofit organization created by the Congress to funnel federal aid into the public-broadcasting system, would provide $1.1 billion over three years, a substantial increase over its current three-year funding block. (See Education Week, March 18, 1992.) The bill, which has passed the House, was awaiting Senate floor action late last week.

As part of the Congressional debate over public broadcasting, the financial status and commercial activities of major players such as the C.T.W. have come under inspection as well.

Some members of the Congress and political commentators have questioned why an operation such as the C.T.W., which appears to be thriving in the areas of magazine publishing and product licensing, requires any public funding at all.

"This Children's Television Workshop is already sitting on $51 million in stocks and bonds,'' Senator Jesse A. Helms, Republican of North Carolina, said in March during floor debate over the C.P.B. bill. "Oh, they are in desperate straits all right.''

For several years now, public broadcasting has been gaining a much more overtly commercial look and feel. The messages at the end of a show crediting corporate underwriters have expanded from brief mentions to short clips that come very close to looking like commercials.

Like the C.T.W., other public-broadcasting entities have been expanding their operations into potentially lucrative side businesses, such as book publishing, videos, and associated products.

"Public broadcasting has been transformed into big business,'' Senator Robert C. Smith, Republican of New Hampshire, said during the March floor debate.

But supporters of public broadcasting respond that the Congress itself has encouraged participants in the system to become more self-supportive.

"Congress several years ago encouraged public television to be entrepreneurial, to look for new sources of funding,'' said Karen Johnson, the director of publishing and product merchandising for the WGBH Educational Foundation, the owner of the public-broadcasting stations in Boston that provide such national programs as "Nova'' and "Evening at Pops.''

Branching Out

WGBH last year became a partner in a for-profit store that features books, videos, computer software, and other educational products related to Public Broadcasting Service shows.

The WGBH Learningsmith store opened last October in a shopping mall in Newton, Mass., a Boston suburb. A second store is scheduled to open in June in Cambridge, Mass.

The Learningsmith store is modeled on retail stores operated by the Australian Broadcasting Company, Ms. Johnson said.

WGBH's partner in the retail effort is Marshall J. Smith, who has run successful chains of book and video stores in the Boston area.

"The store sells educational software, documentary and educational videos, books that have to do with learning, games, kits, and puzzles, all related to learning,'' Mr. Smith said. The store has more than 11,000 items and is geared to both adults and children.

Ms. Johnson would not say how large a stake the public-broadcasting station has in the retail store, except to say it is a minority investor.

"The benefit to WGBH is hard to quantify,'' she said. "We expect to earn some money, but not much. If it works, it will give us a small amount of discretionary money that will give us seed money'' for new programming.

Other public-broadcasting entities have looked for commercial opportunities as a way to provide more stable funding.

PBS itself increasingly has moved into the market for educational and home videos. PBS Video sells documentaries and other PBS programming to the school, college, and library markets. Its current catalog runs more than 200 pages.

"We sell about $7 million worth of videos a year, but there hasn't been much net [profit] lately,'' said Jon Cecil, the director of video marketing for PBS.

The home-video market has proved more daunting for PBS because of the high cost of purchasing home rights. PBS could not afford to get into the business itself, so it licensed its name and logo to Pacific Arts Video, which markets certain public-television programming under the PBS Home Video label, Mr. Cecil said.

"The Civil War,'' the Ken Burns documentary that first aired on public television in 1990, has been a runaway hit on both educational and home video.

"We've sold about 7,500 sets in the education market,'' Mr. Cecil said. At $350 a set, that comes to about $2.6 million. Far more copies have been sold, at a lower price, under the home-video label. Mr. Cecil said he did not know how much PBS had taken in from royalties on the PBS Home Video version of the series.

C.T.W.'s Merchandising

By most accounts, the Children's Television Workshop has been the most adept of public-TV entities at merchandising. It licenses its Muppet characters for a broad array of products, from stuffed Big Bird dolls to stage shows to theme parks. This year, it expects to take in $29.1 million from product-licensing fees, and another $6.7 million from home-video and computer-software products.

With a projected $42 million in magazine sales and about $9 million from overseas versions of "Sesame Street,'' the C.T.W.'s self-generated revenues will account for 80 percent of its $105-million budget this year. The rest comes from public-television stations, which underwrite about one-third of the annual cost of "Sesame Street,'' C.P.B. grants, federal grants for mathematics- and science-related projects, and corporate and foundation contributions.

The C.T.W. has earned a reputation in the retail and advertising communities for being a stickler for quality when it reviews product proposals. The organization's officials acknowledge that they could earn even more money if they were to allow "Sesame Street'' characters to pitch products, or allowed ads aimed primarily at children. Both practices are forbidden under C.T.W. guidelines.

"On 'Sesame Street,' we use the very techniques of commercials to teach,'' David V.B. Britt, the president and chief executive officer of the C.T.W., said last week. "It doesn't seem right'' to allow ads aimed at children to promote the show's merchandise, he said.

The C.T.W. has maintained long-time ties with such companies as Random House for children's books, Hasbro for toys, and J.C. Penney for clothing. Under a recent deal, a chain of Sesame Street retail stores has been launched on the West Coast.

"As long as I have been around, people have come to talk to us about opening stores,'' Mr. Britt said. "This group came to us with a concept that we thought was very much in keeping with the nature of 'Sesame Street' itself.''

The stores, owned by S.S. Retail Stores Corporation of Hayward, Calif., resemble the "Sesame Street'' set and feature toys, educational products, and a line of clothing. Thirteen Sesame Street General Stores have opened since 1990 in malls in California, Oregon, and Arizona, and the company hopes to keep expanding.

Mr. Britt is confident the harsh spotlight of Congressional scrutiny on the C.T.W. and all of public broadcasting will eventually dim.

"There is something very peculiar about this debate,'' he said. "The people criticizing C.T.W. for being too successful are the same people who were saying we need to get off the dole.''

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