Public Broadcasting Service president Ervin Duggan has a new mantra: “Nonprofit does not mean bankrupt.”

Duggan has been heard uttering that phrase a lot lately, generally in defense of the pubcaster’s latest adventures. PBS has been leading public TV’s charge into the unabashedly commercial marketplace, and the response from PBS’ supporters and critics so far is topped by confusion, and not a little anger.

Last week, public TV dramatically accelerated its commercial tie-ins.

First, Children’s Television Workshop, the engine behind the 26-year-old “Sesame Street” empire and one of PBS’ strongest program suppliers, unveiled a major partnership with Sony Corp. of America. The two companies will shape distribution and marketing deals around “Street,” CTW’s top franchise, beginning this year.

The agreements are headed by at least two live-action feature films to be produced and distributed by Sony’s Columbia Pictures in the next three years. The duo will also reshape CTW’s lucrative homevideo, audiotape, book, and tape products so that Sony Wonder, the children and family division of Sony Music, will take control of the licensing.

Two days later, PBS unwrapped a new two-year licensing pact with United Media, a top licensing/merchandising outfit whose clients include “Peanuts” and Pepsi. The deal lets UM develop and market products sporting the PBS logo, including books, “educational toys,” and software. It also lets UM handle development of a new product line featuring the PBS “P-Pals,” which are animated characters used in PBS promotional interstitials. The first products should be on the market in ’96.

The two deals are the crest of a commercial wave washing over pubcasting in the past year. In March, PBS forged an alliance with MCI to underwrite programming and develop newmedia uses for shows. Last summer, Disney/Buena Vista and PBS began a relationship for the syndication rights to the series “Bill Nye the Science Guy.” And last spring, Turner Home Video partnered with PBS to distribute and market video versions of PBS series.

Since Duggan took over as PBS’s fourth president 14 months ago, public TV’s most visible entity has thrown itself into waters that might have been deemed unchartable for the industry a few years ago. It’s clear now, though, that the flurry of commercial bonding is based on the size of the sharks public TV is keeping at bay in Washington.

“The whole thing constitutes a Catch-22 argument,” Duggan counters. “The question heard constantly was, ‘Why don’t you make more revenues?’ Now that it’s happening, that we’ve become better stewards of funding, they want to take this investment away because they feel there’s no need for us. We’re not replacing federal funding. We’re a public institution. But should income be used as a way to punish us?”

Still, the naysayers say, the problems public TV is setting itself up for – led by PBS – are many. Pubcasting’s numerous detractors love to zero in on the revenues generated by the not-for-profit company as proof that public TV needs no government support.

“Public broadcasting’s failure is that it’s never secured a stable funding source,” says a longtime producer of public TV shows. “But that’s not to say that it shouldn’t maximize its financial opportunities.”

CTW’s deal with Sony could generate an estimated $10 million-plus per year in product revenues, apart from any “Sesame Street” feature-film profits down the road, sources said.

Duggan and United Media president Douglas R. Stern both say that the PBS/United licensing deal will bring “modest” cash influxes from license royalties.

Duggan also cited an ongoing “financial model” study that’s estimating product revenues from CPB-backed projects. It notes that, in the next five years, those revenues will not rise above “single-digit millions of dollars. We’re not going to see vast pots of gold emerging from product licensing,” he said.

But public broadcasting has a lot of accounting to do with its new gigs, as well as a lot of explaining. A board of industry execs is being chosen to help watchdog the licensing revenues from pubcasters’ projects.

“When will anybody truly know the extent to which these (commercial) tie-in operations have pumped out revenues for PBS, CTW, and the member stations?” asked a former pubcasting exec.

Yet PBS and CTW have been downright joyful about their new arrangements.

“Our mission is intergalactic,” said Duggan. “We want to reach people on any shore. But,” he added, “I’m not going to stop doing what I consider to be right and prudent for this organization because some people criticize it.”

Meanwhile, PBS responded directly to proposed cuts in federal funding for public TV by announcing April 28 that it is trimming its plannned fiscal ’96 budget to save its member stations nearly $5 million. In addition, it will eliminate 12 staff positions, including senior vice presidencies in broadcast technology and programming.

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