Big Bird is flying over to HBO.
Known for its dramas and risqué comedies aimed at adults,
including "Game of Thrones," "True Detectives" and "Girls," Time
Warner Inc.'s HBO has formed a partnership with Sesame Workshop in
the hopes of becoming a major player in children's television.
The move is the latest by HBO to better position itself against
competitors including Netflix Inc. and Amazon.com Inc., each of
which have moved aggressively into children's television through
original content and rerun acquisitions.
"When we had an opportunity to put an iconic show like 'Sesame
Street' on the network, we jumped on it," said HBO Chief Executive
Richard Plepler."
Under the terms of the deal, starting this fall HBO will become
the first stop for new episodes of the children's classic "Sesame
Street" before they appear on their traditional home of PBS nine
months later. The agreement will allow Sesame Workshop to nearly
double the number of new episodes of "Sesame Street" it makes
yearly from 18 to 35.
Sesame Workshop will also produce a "Sesame Street" spinoff and
another educational series for the premium television service and
its online platforms HBO Now and HBO Go that could end up on PBS as
well.
In addition, HBO is acquiring the subscription online video
rights for older episodes of "Sesame Street" after current
agreements with Netflix and Amazon expire later this year. HBO is
also licensing repeats of "The Electric Company" and "Pinky Dinky
Doo," a cartoon for preschoolers from Sesame Workshop.
Although "Sesame Street" and the other children's programming
HBO is getting will be available on its traditional TV channels,
the real motivation is to have content available for its online
services HBO Go and HBO Now.
Children are increasingly watching shows via streaming services
instead of traditional television. According to Jeff Dunn, chief
executive of Sesame Workshop, two-thirds of children now first
experience the show on video-on-demand and streaming services.
"We're thinking about the different ways people are watching and
thinking about different audiences," said Mr. Plepler. He played
down the idea that a motivation for the pact was the success
Netflix and Amazon are having with children and families. "What
informs all our decisions is we want to put great programming on
the network," he said.
For Sesame Workshop, the HBO deal is a life raft. Mr. Dunn, a
former top executive at Viacom Inc.'s Nickelodeon who became CEO of
the nonprofit educational organization last October, said he
started thinking about finding a partner soon after he joined.
"It quickly became clear to me that the economics of the
organization needed to change," he said. Sesame Workshop was
operating a deficit and last fall he let PBS know that "we can't
continue to lose money like this."
Contributions from PBS only account for 10% of Sesame Workshop's
revenue. The bulk comes from licensing and DVD revenues. However,
the latter has diminished as more children get their entertainment
from online platforms.
"If this is where the children are, we have to recognize that
shift and have more than just a home on PBS," Mr. Dunn said. He
briefly considered launching a subscription video-on-demand service
for Children's Television Workshop but ultimately decided the
economics were "not very compelling" and that the organization
would be better off teaming up with a premium brand.
However, a completely exclusive deal was never on the table.
"Our number-one issue was to remain with PBS," Mr. Dunn said. In a
statement, PBS said the HBO arrangement wouldn't mean a reduction
in its commitment to children's programming.
But it will make things easier on the wallet. As part of the
agreement with HBO, PBS and its member stations will no longer have
to pay for episodes of "Sesame Street."
Sesame Workshop will retain all editorial control over the
content of "Sesame Street" and its other shows.
Write to Joe Flint at joe.flint@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires