The proposed sale of Whittle Communications’ Channel One--a deal said to be nearing completion--would combine the controversial classroom-television operation with a growing media company that is already heavily involved in education.
K-III Communications Corporation last month offered about $300 million for the Whittle Educational Network, according to people who are familiar with the negotiations. The network’s flagship program is Channel One, the profitable advertising-supported classroom news show seen in 12,000 secondary schools nationwide.
K-III is a New York City-based conglomerate that is 85 percent owned by the leveraged-buyout firm of Kohlberg Kravis Roberts & Company. Its offer came just as Whittle Communications was negotiating to sell a 50 percent stake in the television operation to the merchant-banking arm of Goldman, Sachs & Company.
Several of Whittle’s business ventures have faced difficulties in the past year. The company closed down a television service for doctors’ waiting rooms and a news service for medical professionals, and laid off employees. (See Education Week, Aug. 1, 1994.)
A Superior Offer
Neither company would comment officially last week about the pending deal, but those familiar with the details say K-III’s offer was much more attractive for Whittle Communications than the proposed deal with Goldman, Sachs.
“K-III made a financially superior offer,” said a person who was close to the negotiations. “It makes sense strategically for the two to be together.”
K-III is reviewing Whittle’s finances and operations, and the deal could be completed by mid- to late September, sources said.
A central element of the deal is that K-III would allow Christopher Whittle, the founder and chairman of Whittle Communications, to remain as head of the Whittle Educational Network. The operation would maintain its headquarters in Knoxville, Tenn., and its broadcast facilities in Los Angeles.
“They have made a firm commitment to the existing management and location” of the Whittle network, one source said.
Channel One, which debuted in 1990, began its fourth full season of programming last week. The program has estimated annual revenues of $80 million to $100 million from the two minutes of advertising carried each day. Schools are loaned television monitors and other equipment in exchange for making the show a part of the curriculum.
Other elements of the Whittle Educational Network include the hardware network of school satellite dishes and monitors, and related television programming such as the new P.E.TV, a physical-education series sponsored by Reebok International.
K-III’s Fast Growth
K-III was begun in 1989 by Kravis Kohlberg Roberts and has grown through acquisitions into a Fortune 500 company with 1993 revenues of $845 million.
The privately held company has acquired a diverse array of media properties that include New York, Seventeen, and Automobile magazines, the Daily Racing Form, and the World Almanac.
K-III’s education unit includes the venerable Weekly Reader; Newfield Publications, a leading marketer of children’s book clubs; and Films for the Humanities & Sciences, which has a catalog of more than 4,600 educational videos and video disks.
Acquisition of the Whittle network could give K-III new opportunities to reach the K-12 market with its existing products, observers said.
The sale of Channel One is not likely to quiet critics of television advertising in the classroom.
“It’s a very ominous thing,” said Robin Templeton, a coordinator for Unplug, an Oakland, Calif.-based group that fights Channel One and other forms of commercial activity in education. “One of the nation’s largest leveraged-buyout companies is now leveraging the time of children in school.”
More Edison Agreements
Meanwhile, insiders say the pending Whittle Communications deal with K-III will not have a major impact on the Edison Project, the for-profit education-reform effort also founded and chaired by Mr. Whittle. The project is owned by several of the partners in Whittle Communications, but it is a separate partnership.
The Edison Project continues to reach tentative agreements to run public schools, beginning in 1995. In recent weeks it has won initial approval to run seven schools in Hawaii and one in Lubbock, Tex. That brings the project’s total to 23 schools in 1995, with at least five more to be added the following year.
