The Washington PostDemocracy Dies in Darkness

'Sesame Street’ corporate deals have upset fans. But they keep the show alive.

Only more investment in public television will eliminate the need for the iconic children’s TV show to chase revenue.

Elmo on Sesame Street (Mark Mann for The Washington Post)

An earlier version of this article stated that “Sesame Street” had moved to HBO. The network did acquire exclusive rights to air new episodes for nine months, but PBS does still air old episodes, including those from newly produced seasons once this exclusivity window has expired.

In recent years, “Sesame Street” and its production company, Sesame Workshop, have provoked outrage by making deals with for-profit companies like HBO and DoorDash. But the reality is that while such deals betray the vision of the show’s founders, the workshop has resorted to similar means of funding throughout its history. Such partnerships are baked into the funding model that policymakers forced on “Sesame Street” from its earliest days and will remain a part of the show’s business model unless and until the United States more fully embraces public television.

In 1966, television producer Joan Ganz Cooney and philanthropic executive Lloyd Morrisett had an idea: to use television to provide equitable education to preschoolers across the country. Over the next two years, they secured $8 million in public and private funding to make their dream a reality: “Sesame Street.”

Half of the $8 million budget came from the federal government, split between the Office of Education and the Office of Economic Opportunity. Government officials saw “Sesame Street” as an extension of President Lyndon B. Johnson’s War on Poverty and a cost-effective solution to bolster Head Start, the new federal preschool program. Additional grants came from philanthropic funds, the Carnegie Corporation and the Ford Foundation, which were interested in innovative approaches to education and poverty relief. The final contribution came from the newly formed Corporation for Public Broadcasting.

Because parents did not trust commercial television to provide quality content for children, Cooney and Morrisett feared any association with commercialism would diminish the credibility of the project. Instead, they insisted on “Sesame Street” airing on public television. And from the first episode, they convinced politicians, the press and the public that the show was a public good, worthy of investment. Yet, this didn’t make it easy to fund the workshop.

Minimal funding was guaranteed after the show's first season. “As soon as we got on the air,” Cooney remarked, “we had to think about survival.” Philanthropic funds were committed to developing new ideas, not sustaining existing ones. Their contributions had an expiration date. Morrissett hoped that the federal government would fill the void.

But the political climate had changed. A new breed of conservatives was rising that wanted to slash government expenditures and shrink the state. In 1973, Cooney met with “one of the Nixon hatchet men,” to try to secure financial support for the program. Instead, she came away realizing that even though President Richard M. Nixon praised “Sesame Street” as an exemplary model for children’s television, Nixon opposed funding the show because he was against public television.

So Cooney and Morrisett turned to Capitol Hill to work around the hostile administration. And Cooney had an ace in the hole: She leveraged personal connections to meet with a friend of her late father: Sen. Barry Goldwater (R-Ariz.) was one of the leading voices on the right.

But bowing to Goldwater's conservatism, Cooney didn’t try to sell him on the merits of public broadcasting or “Sesame Street.” Instead, she outlined a plan to wean the show off federal funding by 1981. After the meeting, Goldwater wrote a letter to the head of the Department of Health, Education and Welfare. “He said, in effect,” Cooney recalled, “Give little Joanie Ganz anything she wants.” In the next draft of the federal budget, the workshop had its own line item, severed from funding for public broadcasting.

But this safety net was temporary. The show had to find new sources of sustainable revenue. This led the producers to embrace licensing and merchandising — even as Cooney remained wary of commercial ventures, which ran contrary to the show’s identity as a public good.

The workshop established a team that had to approve all toys, games, clothes, books, albums and other products. Materials produced with “Sesame Street” characters needed to be educational in nature and priced affordably so they would be accessible to all children.

Between 1975 and 1978, the amount brought in by the workshop from product licensing jumped from $550,000 to over $5 million. Despite this success, the workshop struggled financially in the early 1980s. Things were so precarious that Cooney developed a plan for downsizing if the workshop’s endowment dipped below $10 million. At the time, it had $14 million, and that number was falling.

Then, a savior emerged — Talking Big Bird, an animated plush Big Bird toy with a built-in cassette player. Talking Big Bird’s eyes and beak moved as the toy told stories. “Talking Big Bird was like hitting a jackpot … on a slot machine,” Cooney said. “We just couldn’t believe that the quarters kept coming out. Talking Big Bird was a miracle.”

Yet, the toy required another sacrifice of principle. Priced at $69.99, it was far from affordable — but that was the cost of saving the show. By 1995, the workshop was making $26 million a year from licensing, a significant portion of its $110 million budget. Other funds came from donations, foundation grants and revenue from Sesame Street Parents magazine and international co-productions.

This very success, however, soon became a target.

Incoming House Speaker Newt Gingrich (Ga.), the first Republican speaker in 40 years, made defunding public broadcasting a top priority. Gingrich and his allies exaggerated the sales numbers for “Sesame Street” toys to prove that the show could support itself. “Big Bird makes money. Barney makes money,” Gingrich argued, “These are profit-making centers, they would survive fine” without public broadcasting. He suggested that the workshop partner with a commercial broadcaster if need be.

Gingrich’s arguments misrepresented “Sesame Street’s” financial health. All of its profits went to fund the workshop, and the margin was thin. In 1995, the workshop operated at a $2.5 million deficit and laid off 12 percent of its workforce. PBS was a vital source of funding that year, contributing $6 million to the production of “Sesame Street,” about one-third of the show’s $19 million budget.

And Gary Knell, the workshop’s senior vice president of corporate affairs, rejected partnering with a commercial broadcaster. For-profit networks wouldn’t support the show, and “Sesame Street’s” producers didn’t “feel that educational preschool programs should be interrupted by commercials.” Remaining commercial-free and available to all children was crucial to the show’s reputation.

Ultimately, public broadcasting survived Gingrich’s threats, thanks in large part to “Sesame Street’s” popularity and another Big Bird toy. Responding to Gingrich’s proposals, Rep. Eliot L. Engel (D-N.Y.) brought a plush Big Bird toy (not the talking version) to the House floor and pleaded, “Don’t kill Big Bird by voting for mean-spirited Republican budget cuts on public broadcasting.”

But Big Bird toys weren’t enough to sustain the workshop. Neither was the show’s partnership with PBS, whose contributions fell to 10 percent to 15 percent of the production budget. During the 1990s and 2000s, the show often ran a multimillion-dollar deficit.

This financial reality forced Sesame Workshop to compromise more significantly on its principles. Its toy line often strayed from strictly educational and affordable fare. And in 2015, it made the move Knell had rejected so categorically in 1995. New episodes of the program left public television for HBO — a premium subscription service. In 2021, “Sesame Street” even partnered with DoorDash for a marketing campaign that premiered during the Super Bowl.

For some fans, the latter two decisions crossed the line between sustaining the program and selling out. Producers created the show to be accessible to all children, particularly those from low-income families. On HBO, however, the newest episodes of “Sesame Street” were now behind a paywall. It transformed a public good into a private commodity.

The DoorDash deal left social media users questioning why the “Sesame Street” muppets were promoting a for-profit corporation. Some criticized “Sesame Street” for supporting DoorDash specifically given the company’s labor record.

But to Sesame Workshop executives, the reality was simple. Only HBO’s five-year funding commitment provided a sustainable model that allowed for continued production of the show, chief executive Jeffrey Dunn explained to the Hollywood Reporter. The workshop’s chief marketing officer, Samantha Maltin, described the DoorDash partnership in similar terms, “As a nonprofit, we appreciate that this partnership and philanthropic support will elevate and advance our mission to help kids everywhere grow smarter, stronger, and kinder.”

In short, public-private partnerships have long been necessary to keeping “Sesame Street” on air, making the show both a public and commercial good. As Morrisett put it in an oral history interview in 1999, “To survive as an organization now … without government support, without significant philanthropic support, you essentially have to engage in things that are often labeled as commercial activities.”

Our lack of commitment to public broadcasting makes it impossible for “Sesame Street” to be a purely public good. Only a significantly greater investment in public television will allow for ending the commercialization of beloved characters like Big Bird.