There goes the neighborhood: The story behind the new ‘Sesame Street’ and its journey to HBO


The rent is high at 123 Sesame Street.

It’s always been an expensive address. But for a while, the funding was there: From the federal government, a few philanthropists, viewer donations to PBS, and, most of all, Sesame Street stuff. Books and videos, toothbrushes and pajamas, balloons and birthday cards, stuffed Oscar the Grouches and Grover slippers as fuzzy as Grover. Such ravenous consumption by the preschool set of all things Sesame kept the lights on at the most beloved brownstone in America.

But the kids aren’t buying Tickle Me Elmos like they used to. They don’t want DVDs anymore. They don’t even know what VHS tapes are. The kids have tablets, which means the kids have control. The kids decide what to watch, and what the kids do not have is any sense of nostalgia or institutional memory. The kids do not care how much you care about Cookie Monster.

This Saturday, the 46th season of Sesame Street will premiere on HBO. Last August, the series signed a five-year deal with the network not exactly known for kid-friendly programming — though HBO did air Jim Henson’s Fraggle Rock back in the early 1980s, fair to say the modern viewer is more likely to associate the premium cable giant with NSFW content than with the ABCs of PBS.


For the first time in its nearly 50 years on the air, Sesame Street will air new episodes exclusively on HBO only to air on PBS and its member stations nine months later. Reruns will air on PBS in the interim. The new season brings with it a new set, designed to give core characters central locations. The partnership gives PBS Sesame Street for free and permits Sesame to produce double the number of episodes per season and a Sesame spin-off, even a new Sesame Workshop educational kids’ series. HBO will be streaming 150 archived episodes of Sesame Street plus 52 episodes each of Sesame Workshop’s Pinky Dinky Doo and The Electric Company.

The arrangement may feel, to some, like a violation of the original ethos of Sesame Street. But this pact may have been the only way to keep Sesame Street alive.

Sesame was in dire financial straits, operating at a multimillion dollar loss for years on end. Changing viewing habits of children — two-thirds of Sesame’s audience now discovers the series on digital platforms — caused the revenue from licensing of Sesame DVDs to plummet. And Sesame Street’s neighborhood has gotten very crowded. As Sesame Street executive producer Carol-Lynn Parente put it in an on-set interview last May, “When we started, it was us and Mr. Rogers. And now there are 96 other preschool shows.” Peak TV: It’s not just for grown-ups.

Why should HBO play the hero? HBO is competing for eyeballs (and Emmys) not just with other premium cable stalwarts but streaming giants like Amazon and Netflix. As HBO makes moves toward being even truer to its “not-TV” tagline by launching a streaming-only service, HBO NOW, it’s acquiring the type of talent likely to do gangbusters numbers on that platform: Exclusive partnerships with Jon Stewart and Bill Simmons were announced within months of the Sesame deal. The Sesame setup looks like a win-win: Sesame gets the budget of HBO without sacrificing the values and reach of PBS, while HBO can add one of the most respected, trusted brands in children’s television to its stable of offerings.

But how did Sesame Street get here? Why was one of the most iconic children’s programs in world hemorrhaging money by the millions? Is this two-tier system that gives middle- and upper-class children new episodes nine months before making them available families without HBO a betrayal of Sesame Street’s mission to serve the underserved? What does the move mean for HBO, PBS, Sesame Street, and Viewers Like You?

If you have questions about Sesame Street, you’ll want to start with Lloyd Morrisett, because Sesame Street started, in large part, with him. He is the man who, in 1965, turned to Joan Ganz Cooney at a dinner party and asked her, “Do you think television could be used to teach young children?” The two went on to found the Children’s Television Workshop, now Sesame Workshop, together.


Though to those who grew up on Sesame Street, everything about the series feels sacred, “Sesame Street is part of the television world,” Morrisett said. “So in thinking about changes, you have to… try to adapt, insofar as you can, to the realities of the television world.”

Sesame Street has been operating at a loss for a long time now — over the last three fiscal years, the show lost $21.7 million — as the money from donations, distribution fees, and, most crucially, licensing for merchandise dropped. The rise of digital streaming has fueled the fall of DVD sales; plenty of Sesame material is readily available at the show’s official YouTube channel and elsewhere. Why buy “Proud to be a Cow” on home video when you can watch the clip online for free?

By 2015, Sesame Street “was clearly insupportable” in its current incarnation, Morrisett said. “The question became, how to best continue to serve the audiences that we wanted to serve in a way that we could continue the production.”

It wasn’t always this way: In its first week, Sesame was being watched in 1.9 million households, an especially impressive feat considering the show could only reach 67.6 percent of the country, and a not-insignificant number of viewers had to watch on UHF stations, which included any broadcast channels 13 and above. The inaugural season consisted of 130 hour-long episodes, “which is mind-boggling,” said Gary Knell, president and CEO of Sesame Workshop from 2000 to 2011. As the years passed, “that eventually got cut back to 26 hours. One of the writers once told me, if we eliminate one more hour, we’ll have to eliminate a letter of the alphabet.”

Compounding this problem was that, by its 40th anniversary, Sesame had slipped from first place among children’s shows to fifteenth, trailing behind Dora the Explorer and SpongeBob SquarePants. As Newsweek explained, in a line too perfect to paraphrase, “the granddaddy of children’s television is regularly beaten up by a girl who talks to her backpack.” Sesame Workshop announced a round of layoffs that would drop 20 percent of its staff.

By 2015, the financials had only gotten worse. “I think they were faced with a dilemma of: Do we severely cut back on production? Do we stop production for a year or two? Do we lay off half the staff? These were a bunch of decisions they had to undoubtedly face,” Knell said. “Or is there some elegant solution that they could come up with that might make a difference to keep the model alive in some different fashion?”

Conversations about seeking a partner began within PBS in February of last year. What did HBO offer that (reportedly, but also, obviously) Netflix, Amazon, and other premium cable titans couldn’t, or wouldn’t? According to Morrisett, “HBO seemed the most flexible, one, and two, came up with a financial offer that made the continuing production of the show possible, at least over the next five years.”


Did other potential partners demand total exclusivity — which is to say, they were unwilling to allow new episodes of Sesame Street to ever air on PBS? Scott Chambers, Sesame Workshop’s senior vice president of North America media and licensing, said, “Let’s just say that HBO understood that [Sesame had to have a presence on PBS] much more quickly, and was willing to embrace it… And the other parties didn’t seem to embrace that aspect as quickly.”

According to Chambers, “It was really Richard Plepler [chairman and CEO of HBO] who immediately understood that Sesame Street, as an American institution, really can’t leave a platform like PBS, if at all possible. It really needs to maintain its broad and free distribution to the public.”

“At HBO, we are all fans of the series and couldn’t imagine Sesame Street not continuing on PBS,” Michael Lombardo, HBO president of programming, wrote via email. “We are proud to play this role in allowing it to continue on public television while at the same time seeing great value in adding an iconic series and an extensive library to HBO’s lineup.”

As for the nine month delay between episodes debuting on HBO and PBS, that “was enough time to allow HBO to feel they delivered to their subscribers a special offering, but not too much time as to take away from the value PBS was getting,” Chambers said. An added bonus of that timing: The new season of Sesame Street premieres on PBS in the fall, at the start of the school year, “which is historically when they’ve done it.” (According to Lombardo, the “window of exclusivity didn’t play a major part in our discussions with Sesame Workshop.”)

With this new partnership, Sesame Street will be fully funded by HBO. But PBS was “essentially getting it for free before,” said Morrisett, by paying Sesame Workshop about $1.5 million a year for the right to distribute the show, which only amounted to, give or take, 10 percent of the total production costs. “The rest of it was coming out of our portfolio.”

Without this partnership, or one like it, would Sesame Street be dead? “In the long run, yes,” Morrisett said.

CREDIT: Zach Hyman/Sesame Workshop
CREDIT: Zach Hyman/Sesame Workshop

How long could it have lasted? Harder to say. Sesame Workshop has an investment portfolio worth tens of millions of dollars; even if the show kept losing, say, $10 million a year, some of that could have been made up from dividends. “But you’re certainly not able to do new things,” said Morrisett. “You’re not able to attract the talent that you need in order to do your work well.”

Michael Davis literally wrote the book on Sesame Street: He is the author of the New York Times bestseller Street Gang: The Complete History Of Sesame Street. He feared that, without the financial security HBO provides, Sesame Workshop would have to cut back on “the wonderful work that the workshop has done for the audience of children whose parents have been deployed, who came back injured or didn’t come back at all,” or the coproductions of Sesame Street in volatile regions all over the world, including Afghanistan, that work to “make a more peaceful, tolerant world,” he said. If Sesame Street kept struggling just to stay on the air, it’s very possible “that those kind of pro-social, courageous and important endeavors would go away. They just wouldn’t have the ability to do the kinds of things beyond creating the core show.”

How expensive is Sesame Street? Multiple sources put production costs at about $20 million a year. (Sesame Workshop declined to confirm that number.) The price tag is so high, Knell said, because “unlike most shows, it includes a huge research element, which is baked into that $20 million.” For whatever issue was chosen as the focus of the season, “They would hold a content seminar and bring people in who knew about these topics from a child development point of view, write the scripts, do evaluative research… There’s no other show on television that spent these kind of resources for kids. So the actual TV production was probably more like $15 or $16 million, and then you added in promotion and research, it got you to 20 or 21 million bucks.”

In addition to producing new material each year, “they’re repurposing the older segments, which they have to pay residuals on,” Knell said. “So it’s a much more expensive proposition than doing an animated series, like Blue’s Clues or Dora. Much more expensive. Now you can argue: Did they have to do that or not? But that was the plan.”

Time to talk about the Snuffleupagus in the room: What does it mean for Sesame Street, the mission-driven series that has always aired on PBS, to premiere new episodes on HBO, a premium cable channel? Remember, the greater story of Sesame Street, as Davis said, “is that it was created to close the gap between children who were growing up in homes with records and books and enriching materials, and children who are not.”

Making sure poor households had access to — not to mention, any awareness of — Sesame Street has been a not just a focus but a considerable challenge from the get-go. Viewers with old-model TV sets couldn’t tune into weaker UHF frequencies without purchasing an additional antenna. In order to build awareness of Sesame Street in the communities the Children’s Television Workshop wanted to reach, Cooney hired Evelyn Payne Davis (no relation to Michael), the director of fund development for the New York Urban League, whose job was to ensure the show reached a black, underserved audience. As Davis describes in his book, she was “the inner-city show[‘s] first inner-city ambassador.”

Still, Davis had virtually zero reservations about the HBO deal. “I was totally, right from the start, okay with the idea that the new seasons would premiere on HBO and [then] come back to PBS. Children weren’t being denied Sesame Street at any time.”

Dr. Michael Rich is the director of the Center on Media and Child Health in Boston and member of the PBS Kids Next Generation Advisory Board (not a paid position).”It’s very easy to fall into a knee-jerk, reflexive, ‘it’s the corporate rapists and pillagers coming in to take away the purity of Sesame Street’ [mentality],” he said. “The reality is, I think the purity of Sesame Street is not the revenue streams going to or from it so much as it is the mission-driven people who create it.”

In its first season, support for Sesame Street amounted to $8 million, half of which came from the federal government, half from private foundations: Carnegie, Ford, the Corporation for Public Broadcasting, and a few other donors. Sesame continued to receive “substantial support from the government for at least ten years,” Morrisett said. But within five years, foundation funding began to diminish, so Sesame looked to other sources of revenue, namely, licensing books, toys, games, and records.

From its infancy, the Sesame Street was mostly paid for by those products. Every copy of Grover Sleeps Over on the bookshelf and every Tickle Me Elmo tucked under the Christmas tree kept Sesame Street in business, and “every single one got this outcry from the purists saying, ‘Oh my God, they’re going commercial!’” said Rich. The “Sesame Street is selling out” concern is as old as Sesame Street.

CREDIT: Photo by Bailey McClure/Courtesy of David Gallo
CREDIT: Photo by Bailey McClure/Courtesy of David Gallo

Knell said that the show was designed to be “inclusive,” calling the series “a universal connector” among children from different socioeconomic backgrounds. “It wasn’t ever meant to be exclusively for lower-income kids. I think maybe some people had felt that way. But it was deliberately inclusive, which was very different.”

He offered a surprising but apt comparison from his days as Sesame Workshop’s CEO: “I always thought about [Sesame Street] like hip hop. It was huge, obviously, in urban areas, but it was massive in suburban America too, with kids with more resources, [who were] probably not the originally intended audience. But it became huge in higher-income neighborhoods.”

Rich expressed potential concern, not about Sesame Street itself, but the Sesame spin-off to come. “Will the HBO interest in tapping the children’s television market drive a different philosophy, in terms of program development for Sesame Workshop?” he said. “Are we going to start getting Sesame Street lite? Copying the things that are attractive about Sesame Street and putting it into more entertainment and commercially-motivated programming, as opposed to programming that is really aimed at teaching children?”

Based on Sesame’s track record of having a near-religious devotion to research, as well as HBO’s reputation for being hands-off and letting creatives shape their own shows (even when maybe it wouldn’t be a bad idea to get involved, e.g. True Detective, season two), “I see no reason to believe that the core of Sesame Street [won’t] be retained,” Rich said. “But I am watching to see what happens.”

Though HBO will have no involvement with the writing of Sesame Street, that will not be the case for all Sesame Workshop projects. “We will play a much bigger creative role in the new series we develop with Sesame Workshop,” Lombardo said. “We are very excited to see where that collaboration can take us.”

What just about every single person interviewed stressed is that children do not care about reruns. In fact, when toddlers discover an episode they love, they want to watch that exact episode again and again and again, a pattern of viewing the New York Times deemed “deja view.”

“The great thing about kids programming is that kids don’t follow seasons the way we sort of hang on, ‘When is the new season of Game of Thrones coming out?’” said Parente. “Kids love characters. Elmo is their friend. They tune in to have a playdate with their friend.”

Besides, we’re not editing the alphabet. Seven still comes after six. “Because of [the] very deep and thorough research, these programs are not time-linked,” said Rich. “There are Sesame Street programs from the ’70s and ’80s that are phenomenal and work as well today as the day they were created.”

“No one is less or more well off based upon which specific episode that they are watching,” Sesame Street COO Steve Youngwood said. “It’s really the whole. The most important thing is that they are going to be able to access it for free, and they’ll have more content than they’ve had in the past few years, and we’ll have more shows.”

“When you’re three, and your preferred beverages come in a sippy cup, you don’t know if it’s a brand new episode or one from five years ago,” Davis said. “Cookie Monster is Cookie Monster.”

Sesame Street has premiered on PBS for nearly half a century. Does this change feel like the end of an era?

“It doesn’t feel like the end of anything,” Parente said. “It feels like the beginning of a great three-way relationship with us, PBS, and HBO. It feels like getting to have your cake and eat it, too.” Chambers agreed: “There is not a twinge of sadness.”

Counterpoint: “PBS is not happy about it,” said Morrisett. “They’re unhappy to lose something that they thought they had.”

“I know that they were freaked by this,” said Rich. “But they couldn’t come up with the cash necessary to keep Sesame Street alive. So they’re upset about it, but they don’t have an alternative. It’s not like they were competing for Sesame Street. They were extremely upset about it during the time the deal was being made. But the problem was, they didn’t have a viable counteroffer.”

It does kind of seem like PBS is smart and fusty and broke, and HBO is flashy and popular and rich, and Sesame Street is telling its old boyfriend — who is the nicest person — that she met a new guy, and the new guy has a dragon. Three dragons, not that the Count is counting.

Offered this bulletproof hot-new-boyfriend analogy, Davis said, “HBO is pretty bright and shiny. And the demographics are, of course, enviable. And where are the great shows these days? Right there.”

“PBS finds itself in a really rough and tumble, competitive environment,” said Davis. “Is it bittersweet? Yeah. But also, I think PBS has been its own worst enemy over the years. I think they’ve been change-resistant and slow on the trigger and probably could have made some moves through the years that would have resulted in them being more competitive… I think they were a little hidebound. And HBO is anything but hidebound.”

“PBS owes Sesame Street a huge debt [for the last] 46 years, and now, they needed to pay back that debt,” said Davis. PBS is feeling “maybe a little jilted, but they still have the franchise.”

Knell had a different take. “PBS has nothing to be ashamed of. They deliver a robust, outstanding preschool service to millions of American kids. They’re bigger than Sesame Street in some ways, and Sesame Street is bigger than them. I don’t think they’re codependent on each other as much as some people have made it out to be. PBS has evolved to expand way beyond Sesame Street into other areas of preschool programming, and Sesame Street has expanded beyond PBS.”

One concern from the PBS side, said Morrisett, is that “losing Sesame Street would be a detriment to the argument for continued federal funding for PBS.” PBS has to make the case for its Congressional funding every year — you may recall, in 2012, then-presidential hopeful Mitt Romney promising to kill said funding and, by extension, Big Bird — and “having Sesame Street on PBS has been a strong argument for that support.”

PBS is a national brand, but it’s made up of 350 local stations. Political support for PBS comes, in some part, “from the political influence of a local station at the local level,” Morrisett said. “They can influence their representatives, their Congressmen, and I’m sure they try to do so. So the ongoing financial support for PBS from the federal government may not depend on the national activities of PBS nearly as much as the local stations. If [that] is true, then I would expect little change in the federal support for PBS.”

“Here’s the deal: Sesame Street is still going to be shown on PBS, and if PBS doesn’t exist, it won’t be,” said Rich. “We’re not just talking about the cost of production. We’re talking about the cost of distribution and broadcast. I don’t think [the HBO deal] precludes PBS from being able to say, ‘We are Sesame Street,’ because they still are.”

“If you think about it more as a distribution outlet, then PBS is still particularly important, especially for those who don’t subscribe to HBO,” said Rich. “And that is the demographic that the creators of Sesame Street fought to reach.”

What else will be new in Season 46? Episodes will only be 30 minutes long, instead of the usual hour, a creative decision that was reached before the HBO partnership took place. Though, as all Sesame episodes are a hybrid of new material and “library material,” Sesame-speak for segments pulled from the decades-rich vault of content that’s already aired, Sesame was “able to go back in and make more of the material new,” said Parente.

Another crucial bit of insight from Season 45 market research, Parente said, was what parents reported differentiated Sesame from the rest of the children’s television programs out there: The fact that 123 Sesame Street was a real place, a neighborhood populated by flesh-and-blood humans — alongside fur-and-googly-eyed Muppets — where children felt like they could spend time with their favorite characters.

“What we hear about that competition is that they’re vibrant and colorful,” Parente said. But this arms-race with animation led Sesame astray. “Over the years, we have attempted to add color and vibrancy to our neighborhood.” The unfortunate result of this effort was “a set that didn’t look realistic. It almost looks garish, in terms of how we added colors over time.”

The look of the original Sesame Street set was sparked by a PSA that Jon Stone, a founding writer and producer on the show, caught on TV in 1968. “Send your kid to a ghetto this summer,” the ad began, as black actors walked through a Harlem street, showing off the “facilities,” including “pools” which were really open fire hydrants and “field trips” to lots lousy with garbage.

As Davis describes in Street Gang, Stone realized that “for a preschool child in Harlem, the street is where the action is… Our set had to be an inner-city street, and more particularly it had to be a brownstone so the cast and kids could ‘stoop’ in the age-old New York tradition.” The show’s original set designer, Charles Rosen, scouted Harlem and its surroundings for inspiration.

With the goal of “reinforcing the realness” of the neighborhood in mind, Parente said, Sesame sought out a new set designer. David Gallo, a Tony-award winning scenic designer, showed Parente and her staff a picture of the Sesame set from 1969 side-by-side with a photograph of a New York City neighborhood from the same year. The set used to be “so realistic looking,” said Parente, and that contrast made her see how far from its roots Sesame had wandered. Gallo got the job.

Gallo didn’t think of the project as “redesigning the set of Sesame Street” but rather as “an urban planning assignment,” he said. “We wanted to revert to something that is grittier and more urban.” He also visited Harlem for inspiration, as well Park Slope and Carroll Gardens.

So Elmo is moving out of his place next door to Mr. Hooper’s Store and into the first floor apartment of the brownstone at 123 Sesame Street. The detritus of Elmo’s ex-dwelling has been repurposed into a community garden nearby, much to Abby Cadabby’s delight. Big Bird’s nest is now nestled in a tree. All his earthly — sky-ly? — possessions are secured on branches around this elevated residence. Oscar has a new central location, plus a recycling and compost bin to accompany his signature trash can.

The new set has “a flow to it,” said Gallo. You can maneuver around buildings, walk down alleyways. “There’s much more versatility to the movement on stage.” All the buildings behind the 123 brownstone came down, and the brownstone itself was lifted up on a level, so it can be viewed from any angle.

The Sesame project netted Gallo more “love and hate mail” than any job he’s ever done. “Just about everyone on planet earth has feelings and thoughts about and memories of [Sesame Street],” he said. But he hopes audiences “realize there’s a reason behind the choices. There’s a deep understanding of Sesame Street and what it means to everybody.”

This is the internet; let’s go for the hyperbole. Is Sesame Street the most important children’s television show of all time? Why else would there be such a vibrant, charged conversation around the biggest move the series has made in ages?

“I think it’s like asking, ‘Is George Washington the best president of all time?’” said Rich. “It defined children’s television. It basically created the field.”

Fred Rogers was already on the air by the time Sesame came on the scene — Mr. Roger’s Neighborhood premiered in 1967 — “but he was an independent guy doing his own thing in Pittsburgh,” said Rich. Sesame Street “created a genre of television. serious children’s educational television, from which many other programs, like Blue’s Clues and Dora, have arisen… The world of children’s television is very much richer for the pioneering work that Sesame Workshop did. They were never satisfied with, ‘We’ve got it down now.’ That level of creative humility really has made it stand the test of time.”

“Does that make them the greatest ever?” Rich asked. “Maybe. Maybe not. But certainly, they are the beacon that everyone has followed… I think that, at the risk of sounding like one has drunk the kool-aid, it’s very hard to find an example of another program that has consistently been what the children of that generation needed.”

Graphics by Andrew Breiner.

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