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Can Elmo get along with the Rugrats?

Children’s Television Workshop and Nickolodeon plan to merge programming on a new children’s network, Noggin

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Can Big Bird play nice with the Rugrats? That’s the $100 million question for Nickelodeon and the Children’s Television Workshop (producer of Sesame Street) as they embark on Noggin, a risky new kids cable channel designed to combine entertainment and education — and make a profit to boot. On the surface, a partnership between nonprofit CTW and the hugely profitable Nickelodeon (owned by cable giant Viacom, parent of MTV Networks) may seem more unlikely than Beavis and Butt-head bunking down with Bert and Ernie, but the betting is that this merger actually does make sense. Both companies have growth goals they can’t accomplish without the other, and together they can beat back threats to their empires from Fox and Disney.

Noggin, set to launch in early 1999, will be the first noncommercial, 24-hour educational kids channel ever. For CTW, it represents an opportunity to exploit its tremendous library of shows, including The Electric Company, 3-2-1 Contact, and Ghostwriter — many episodes of which have not been seen in years yet are still considered more original than what’s passed off as kids TV these days. And by entering a for-profit venture with a company such as Viacom, CTW can pump some moola into its often cash-strapped pockets.

A few years ago, CTW had hoped to launch its own stand-alone cable network, but it wasn’t as easy as 1-2-3; in today’s TV world, it’s not what you program so much as who you know. Without a relationship with a powerful cable programmer such as Nickelodeon, the channel couldn’t get off the ground. Now Viacom can sell the channel and use its leverage by packaging Noggin with its other established cable nets.

”As an independent producer of quality kids TV, it’s becoming more and more challenging to ensure that our programming gets out there,” says Gary Knell, executive vice president of operations for CTW. ”The public-TV system, which we’ve been supportive of for 30 years, and will remain so, is chronically underfunded.” On top of that, the broadcast nets haven’t exactly been clamoring for CTW’s wholesome shows. ”We felt we had to tie with a partner to find a place. Nickelodeon understands and shares the vision,” Knell says.

Nickelodeon and CTW are putting up an initial investment of about $100 million to get Noggin going. Nickelodeon will handle the marketing of the channel and looks to charge cable operators between 10 and 20 cents per subscriber for it. Although there will be no commercials per se, Noggin will sell sponsorships — a la PBS — to generate additional revenue.

”We’re not interrupting programming for commercials,” promises Knell. ”We’re looking to have broad channel sponsorship. But we’re not out there doing sales based on ratings.”

It’s easy to see why CTW would want to get in the sandbox with Nickelodeon. One of the most successful cable networks, Nickelodeon is expected to rake in $773 million in net revenue for 1998, according to industry analysts Paul Kagan Associates. The question is, Why does Nickelodeon need CTW? It certainly has the cash and the power to launch its own channel, so it must be looking to get more out of the merger than just some free Cookie Monster dolls.

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