Sesame Street was developed by a 501c3 (Children’s Television Workshop renamed to Sesame Workshop) and sold to PBS. Episodes were licensed by a publicly funded organization, they weren’t produced by one.
Any way money can be extracted from a nonprofit to create private IP is dubious be that a University or public television.
You can easily get to a point where public funding can’t buy anything and can only be used to produce things directly.
For higher education the rule is 100%, even when the funding isn't supposed to be buying anything in particular, or going to the organization which becomes attainted.
However when it comes to creating IP that they don’t own it gets tricky because the IP owner also benefits from the exposure of being on public TV and can then turn that into toy sales etc. On the other hand if the IP flops then public TV has taken all the risk. In many other contexts having a nonprofit take in the risk while a for profit sees the profit is illigal. Just imagine doing this with startups rather than childrens TV shows.
However, how do you guarantee that public television or other none profit is actually getting a discount in such deals?
Why are you bringing it up in the context of PBS negotiating licenses of Sesame Street?
PBS doesn't control congress, it's the other way around!
I don’t know the degree to which it applies in this specific situation.
What the revenue was used for is irrelevant. If I pay an employee a salary, I dont get part of their house. If I pay a Mcdonalds for a burger, I dont get shares of the corporation.
If they make millions or billions from licensing to HBO then they don’t pay taxes on that. They can also distribute those gains to employees and management in the form of bonuses or featherbedding.
And they don’t pay taxes on the sale.
So it seems more like a tax dodge than just a moral argument that government shouldn’t fund private enterprises. Or at least claim that it’s for public good.
I think this misunderstands that the entire point of having a non-profit tax status is to create a tax dodge.
We want them to avoid taxes because we want to promote the products they generate.
>If they make millions or billions from licensing to HBO then they don’t pay taxes on that. They can also distribute those gains to employees and management in the form of bonuses or featherbedding.
Why should we care that they don't pay taxes? If they give it to employees, then they have to pay income tax at a much higher rate than a for profit would.
At the end of the day, the public wanted high quality educational content produced, we set up tax incentives to support it, and the content was made.
Can you provide a source for this? I'm not finding anything that suggests that an employee of a non-profit organization would be taxed at a higher rate than an employee of a for-profit organization.
Why should the Sesame Street production company get tax benefits over any Hollywood production?
>Why should the Sesame Street production company get tax benefits over any Hollywood production?
Specifically because we decided as a society that we wanted to encourage companies making educational content and not Hollywood blockbusters.
There are strings attached to being a nonprofit. These include limits on employee compensation so that the CEO of a nonprofit can't take a billion dollar salary as a workaround for corporate profit. They have to be paid a salary that the IRS thinks is reasonable, and any excess Revenue made by the nonprofit has to go back into its beneficial purpose
But agree in general. US 501c3 status is based on a variety of things that the federal government has determined are worth encouraging--including education--that it has historically deemed the private sector was not sufficiently interested in funding. This in turn comes with strings. Which is not to say there aren't large and wealthy institutions that benefit from this status or that donors to those organizations don't benefit as well from certain tax benefits such as donating appreciated assets.
Can you sign elaborate because I'm generally curious. I run a business and and my portion of employment taxes, and all of salary including their taxes, are discounted before corporate profit and taxes are calculated.
If this were not the case, I would be paying taxes while my bottom line is negative
Where the close relationship comes from may differ. It may even be from trying to avoid conflicts of interest (e.g. an agency whose policy forbids holding assets, and therefore has been the sole funding of a nominally independent production company). Requiring publicly funded would to enter the public domain would be a way to prevent this entire class of misdeeds.
A much simpler definition is if all the stakeholders were aware and consenting of the contract, and did you deliver on your obligations.
Are you insinuating that the producers of Sesame Street failed to deliver or tricked those purchasing the broadcast license
Sesame Workshop did nothing wrong, public TV did by agreeing to such a contract at the beginning of their relationship.
Similar arrangements are quite common in the startup world were you invent something novel. You then make a second company with a license for a specific purpose and sell the second company with the license and retain the core IP. There's nothing fraudulent about it as long as the buyers know they're getting a license and not the core IP
That’s making a lot of assumptions, imagine the CEO of IBM set up his own company which he the sold to IBM. That kind of transaction is just ripe for conflicts of interest.
Now to be clear Sesame Workshop is a nonprofit so this specific deal is less of a concern. However, public TV didn’t get the better end of this deal which is my concern as it demonstrates the obvious loophole.
But, that's not what is happening HERE, which is closer to IBM still contractually paying patent royalties to a former employee of the purchased company.
Sure but it illustrates things are complex. My personal belief is PBS should at a minimum have gotten perpetual rights to the episodes inside the US for any purpose.
PS: IMO, toy sales is somewhat sketchy because the show acted like a commercial in the same way Transformers or My Little Pony did, but that's a different issue. Should they include shows with a toy line is more a question of their mission than how cost effective the deal is.
As to why PBS should have negotiated, they where getting well over 100 new 1 hour episodes per year as PBS was also running a lot of reruns. I am not saying very young kids don’t deserve that much new content but PBS would have been better off owning fewer episodes they could rerun than paying for that deluge and then also paying to rerun episodes. It's one thing not to negotiate after year one, but by year 30?
Though it can be used as a quote, it can also be adjusted to make a point as people can just look up. Anyway are talking about a 50 year relationship not just what happened recently.
Why do you consider it a loophole? It seems like a clear win win in retrospect? They got decades of high quality licensed programing that they wanted.
Why do you think they didnt get the better end of the deal, or at least a good deal? Maybe they could have payed more for more rights, but that doesn't account for other shows where full rights are worthless. Should PBS have done the same for every show they contracted with where the IP ended up worthless?
Companies don't acquire every vendor or contractor they work with for good reason. There is a reason that Netflix or HBO dont buy perpetual IP to everything they air. You dont know what will be a winner or loser, so you pay less and license opposed to buy.
It is easy to armchair past decisions with future knowledge, but those making the decision didn't have that knowledge. You and I should have invested in apple, google, amazon, tesla, ect for pennies. however, we would be broke if we invested in every company that could be worth something.
PBS has been licensing Sesame Street since before digital distribution was even a “thing” to put into a contract. PBS can certainly be licensing those rights now but they’d have to pay more, not less. They paid for the broadcast rights and still do.
There’s always been rights they’ve left to Childrens Workshop such as product licensing which subsidizes the production costs making PBS’s outlay less, not more. PBSs mission is to broadcast public interest programming that’s it. They license all their content similarly.
Let alone the fact that Children’s Workshop is a non-profit with public reporting requirements so it’s not like they have something to hide.
Seems like a working symbiotic relationship.
An AIDS research nonprofit shouldn’t be handing lots of money to Wikipedia just because Wikipedia does good work. I think Childrens Workshop has done great things and they should be creating and licencing content for around the world. However, my point is simply PBS has it’s own mission and could have been a more effective steward of it’s funds.
There’s actually a push for all custom developed code for the US government be open sourced, even if produced by a contractor. Seems reasonable to me.
It isn't something to blame a vendor for several decades after you agree to a contract when you feel like you missed out.
I understand why they do it as I like money too.
There is also donating to something because you want a for profit service to exist as something to buy.
Keep in mind there is a balance where the "ask" for receiving government funding may prevent the creation of the work in the first place.
Sometimes, the right balance may be to require the work to contractually enter the public domain in return for receiving funding. Sometimes, the government could negotiate something less than in order to get a net benefit.