Why ‘Sesame Street’ is Broke and Moving to HBO

Project Casting

Sesame Street is struggling to reach kids and pay their bills now Big Bird is headed to HBO.

A new deal with HBO and Sesame Street will allow for the kids’ franchise to develop twice as much content per seasons, a new Muppets spinoff, and continue the legacy of Sesame Workshop, the non profit that produces the show. However, Sesame Street was nearly gone forever after reports suggested the company was losing money.

According to released documents, the organization has operated at a loss in recent years. But, it begs the question – how can such a popular show lose money? High production costs and the low demand for DVDs has caused for Sesame Street to lose money year after year. Even money earned from their toy collection has hit a record low.

Sesame Workshop has a significant merchandising asset in its intellectual property, which it has licensed to companies including Hasbro, Fisher-Price and Betty Crocker. The nonprofit would bring in revenue from hit toys like Tickle Me Elmo and Talking Big Bird, but it’s still not enough. Licensing revenue has dipped to roughly the same level as the show’s production cost (from $46 million in 2013 to $41 million in 2014), according to the financial statements. “Kids’ habits are shifting. They’ve moved on to interactive platforms,” says Gary Knell, Sesame Workshop’s former CEO, who left in 2011. “Traditional toys don’t really carry the day.”

PBS will air the new episodes nine months after they first run on HBO, reportedly paying a license fee that covers about 10 percent of the show’s annual $40 million production cost.

“HBO gets a huge bonanza brand they will do a great job marketing to get young parents to sign on to their streaming platforms. For Sesame, it’s a way of plugging a big gap and providing funding for a lot of shows.” PBS now will air the episodes from HBO for free, to a young audience unconcerned with spoilers or first runs. Says Gary Knell, Sesame Workshop’s former CEO “I think it’s a win-win-win.”

Source: The Hollywood Reporter