Educate Inc. will expand into educational TV role

A Baltimore company reaches agreement to co-produce `Reading Rainbow,' a long-running PBS children's series

March 08, 2006|By HANAH CHO | HANAH CHO,SUN REPORTER

The Baltimore company known for its Sylvan tutoring centers is expanding into educational television with an agreement to co-produce the well-known Public Broadcasting Service children's series Reading Rainbow under a deal announced yesterday.

It's not an entirely odd partnership for Educate Inc., which has been repositioning its business around consumer services in the past year. Besides its tutoring business and last year's acquisition of the Hooked on Phonics brand, the company said it wants to expand into broadcast media.

"We're very excited about it because it offers a wonderful new brand that aligns with our current business," said Chip Paucek, president of Educate's products division. "It's not so much specifically a foray into broadcast. It's a wonderful plug-in for our products division."

Under the production agreement, the financial terms of which weren't disclosed, Educate and Western New York Public Broadcasting Association (WNED) will create new episodes of the show. Buffalo-based WNED is a co-founder and original co-producer of Reading Rainbow, which first aired on PBS stations in 1983.

A WNED official said the move saves Reading Rainbow from extinction, since financial concerns had left its future on the air in doubt.

Darwin McPherson, a spokesman for WNED, said it's still too early to say how directly Educate will be involved in the show's content. WNED's agreement with Educate isn't one of a kind, as producing partnerships between commercial and nonprofit entities are not new in public broadcasting, McPherson said.

"PBS standards will protect the integrity of any educational content," McPherson said. "And we expect any input that Educate has will be based on their knowledge of the education system but not anything that would forward a commercial agenda."

`Wonderful'

R. Christopher Hoehn-Saric, Educate chairman and chief executive officer, said in a statement: "This is a wonderful opportunity to combine our expertise in helping kids learn to make this beloved series even more effective, engaging and relevant for today's kids."

For WNED, the co-producing agreement ends questions of the award-winning series' future on public television.

"It brings happy closure to the long struggle to secure the funds needed to sustain the series," Donald K. Boswell, president and chief executive officer of WNED, said in a statement.

Not only will Educate co-produce the series, it also will distribute Reading Rainbow-related and other educational products and materials. That merchandise deal was secured through Educate's acquisition of Great Plains National Instructional Library, the largest nonprofit source for classroom-learning materials from the University of Nebraska. The purchase price was $2.8 million, Educate said.

To spearhead its Reading Rainbow venture, Educate hired two new managers. Jinny Goldstein, a former vice president of education at PBS, will head Educate's partnership with WNED and PBS. Dan Hamby, also a former PBS executive, will oversee Great Plains Library's merchandise, publishing and distribution efforts.

"This particular acquisition fits directly into the products division," Paucek said.

Reading Rainbow had been jointly produced by WNED and Great Plains National Educational Media, a division of Nebraska Education Telecommunications (NET).

Educate's producing agreement and acquisition came to fruition when the University of Nebraska's Board of Regents approved the sale of NET's 50 percent share of Reading Rainbow to WNED last week. In turn, the university's governing body approved the sale of Great Plains library to Educate.

`Ancillary growth'

While Educate's tutoring business hit some financial snags lately, the company's acquisition of its latest name brand could provide long-term "ancillary growth," said Kristen Edwards, an education equity research analyst with investment bank ThinkEquity, which does not own shares in the company. Last month, Educate announced a disappointing $4.7 million loss in the fourth quarter.

"By adding products to their business model, there's a new element of risk," Edwards said. "But the big picture is they could leverage their brand name and the Reading Rainbow brand name."

Educate stock closed yesterday at $9.24, down 2 cents.

hanah.cho@baltsun.com

The Associated Press contributed to this article.

`Reading Rainbow'

The series first aired on PBS stations in 1983 and targets children ages 4 to 8. The half-hour show features host LeVar Burton, an actor known for his roles in Roots and Star Trek: The Next Generation, discussing books.

The series has won numerous awards, including 24 Emmys - nine for outstanding children's series.

The show airs on Maryland Public Television.

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