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Big Bird Becomes a Capitalist

PBS change agents charge into the digital era with their business plans blazing and their revenue models smoking.

If Napster is Cameron Diaz, then PBS is Betty White — safe, reliable, and the farthest thing from titillating. With headliners like Big Bird, Julia Child, and that Antiques Roadshow guy, PBS ranks alongside Sears and Ivory Soap on the sex-appeal scale. Or at least it did until a few change agents within the massive nonprofit embraced the digital revolution and its earth-shattering potential.

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Rod Bates is one of those change agents. General manager of the Public Broadcasting System in Nebraska and an entrepreneur with experience in the private sector, Bates is working to transform PBS into a smart operation with a sustainable business model that no longer relies solely on the federal government or viewer donations for its revenue stream. He wants to thrill every user, explore every opportunity, and trash every preconceived notion about the way PBS does business. Here’s his story.

Go to Part Two

Cautious to a Fault

In 1967, the Carnegie Commission on Educational Television published an influential report that helped establish public television as we know it. That document discouraged public-TV stations from entering partnerships that might compromise the editorial integrity of educational programming.

“When I arrived, PBS stations didn’t pursue many money-making ventures for fear they would jeopardize public support,” says Bates, who became general manager of Nebraska Educational Telecommunications (NET), that state’s PBS affiliate, in 1996. “People were preoccupied with protecting editorial integrity, and with insulating themselves from political and private-sector pressure that could affect programming.”

This guarded mind-set cost PBS a great deal of business and revenue, Bates says. For example, members of Nebraska’s scholastic community often approached NET with proposals for distance-learning, teacher-training, and public-outreach programs. Bates says the station frequently turned away good initiatives in order to safeguard its editorial integrity.

“In the private sector, I would have died to have people come to me and ask, ‘Can you help me?'” says Bates, who founded and operated his own business for 10 years before joining NET. Bates’s first directive to the staff: Start with yes. Assume it’s a good idea. And remember that it’s your job and your responsibility to serve the community with quality programming and services.

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The FCC Impetus

At the same time Bates was working to change the mind-set and culture at NET, the Federal Communications Commission (FCC) handed down a mandate that would revolutionize public broadcasting. In 1996, the FFC ordered all public-television stations to begin digital broadcasting by 2003 or to risk losing their channel assignments.

High-definition TV. Data services. Audio streaming. Multiple programming channels. The FCC mandate opened up a world of possibilities and growth for public broadcasting, but it also forced the sometimes-stodgy institution to grapple with enormous change. The future had arrived, and it was overwhelming.

“Our challenge now is to find new programs and services to use that digital spectrum intelligently,” Bates says.

The larger challenge for PBS may be financial. Bates estimates that making NET digital-ready will cost more than $62 million. But once it switches from analog to digital, NET will likely offer multiple programming channels rather than the single channel it now broadcasts. That could mean more in-classroom programming for elementary schools and more private instructional content for homeschooled children, among other services. The federal government promises to cover the conversion costs, but who will pay for that additional programming and development?

“We’ll continue to receive strong support from the federal and state governments, but it will be small and incremental,” Bates says. “If we’re going to pioneer new programs and services, I have to study different business models and form a self-sustaining strategy that protects our editorial integrity.”

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Enter JuniorNet

Bates’s most recent — and perhaps most enterprising — step toward a sustainable revenue model came in June, when the JuniorNet Corp. unveiled a public-private partnership with Nebraskans for Public Television Inc. (NPTV), Maryland Public Broadcasting Foundation Inc. (MPBFI), and South Carolina Educational Communications Inc. (SCEC). JuniorNet offers a subscription-based, commercial-free service via the Web and CD-ROM with games, stories, activities, and tools for children between 3 and 12 years of age. Its content includes Highlights for Children, Reading Rainbow, Ranger Rick, Sports Illustrated For Kids, Zillions, and Jim Henson’s Bear in the Big Blue House. JuniorNet provides its proprietary online service to schools for free and charges households $9.95 a month.

Bates worked with fire starters Paul Amos from South Carolina and Rob Shuman from Maryland to mold the alliance, which promises the three educational networks an equity stake in the JuniorNet enterprise, the opportunity to cobrand JuniorNet’s online service, and a percentage of the home subscription revenue the stations generate for JuniorNet within their markets.

“JuniorNet offers a service that’s compatible with our mission of delivering educational services without commercials,” Bates says. “We are testing the product with teachers in Nebraska, and so far they really like JuniorNet. If a for-profit initiative like this serves our community and simultaneously generates revenue that will allow me to invest in future programming and services, I have zero problems with PBS expanding beyond the Carnegie Commission’s model.”

In a separate but related agreement, a subsidiary of JuniorNet called Lancit Media Entertainment has offered to produce a TV series for PBS designed to introduce children to the Internet in a fun and safe environment. The daily half-hour series will debut in early 2001 and may air on one of Nebraska’s new channels following the transition from analog to digital television.

“A lot of the industry experts say this transition from analog to digital is as profound as the transition from black-and-white to color television,” Bates says. “I think it’s much bigger. We are redefining who we are, what we do, and how we deliver our services. The change has only just begun.”

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This story is continued here …

Contact Rod Bates via email (rbates1@unl.edu).

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