“Channel One should be worth $1 billion in two years” William Reilly 1997

February 6, 2017
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Once upon a time, Channel One News executives had money to burn, but that was once upon a time.

From Jim Metrock:

That’s a hilarious headline considering how small and insignificant Channel One News is in 2017.

Almost exactly 20 years ago (Jan. 27, 1997)  Forbes magazine published an article “TV in the classroom.”

It detailed how wildly successful Channel One News had become in selling ad time for its classroom commercials. Most of their ad money was coming from junk food commercials for M&Ms, Snickers, Pepsi, and other junk food products..

“Channel One last year earned $30 million on revenues of $70 million. “It’s moving much more quickly than I expected,” says K-III Chairman William Reilly, who claims that Channel One should be worth $1 billion in two years.” (K-III was Channel One’s parent company.)

1996 and 1997 might have been the peak for Channel One’s profits.

The net worth of Channel One News didn’t rise as they planned. You see, at the very time this glowing article was published Obligation took on Channel One in a national effort to remove it from American schools. When Ms. Pat Ellis of Jasper, AL told me about her successful efforts to remove Channel One from her children’s school district, I became inspired to throw Channel One’s kiddie marketing program out of public schools. We succeeded beyond our wildest dreams.

2008 – Channel One down to 8,000 schools

2010 – Channel One News has lost 11 schools each week for the last 364 weeks.

2012 – Collapsing: Channel One News loses another 500,000 student viewers.

Simply put, since 1997 Obligation has been much more successful getting schools to throw Channel One out of their classrooms than Channel One has been in signing up schools and advertisers.  Once they had over 8 million students under contract to watch their show and advertising. In the last ten years, the company has refused to give specifics on their audience.  Obligation estimates their “viewing audience” to  be around 3 million.

Channel One’s advertising empire is all but gone.  Today a skeleton crew runs the company almost as caretakers for their current parent company the struggling Houghton Mifflin company. (Hedge Funds Are Dumping Houghton Mifflin Harcourt Co (HMHC 12/9/16)  Any day, I believe Houghton Mifflin might try to sell Channel One, I just can’t figure out who to.

 

1/27/1997

TV in the classroom

REMEMBER Channel One? It was Christopher Whittle’s grand plan to put free television sets in every secondary school. The students would be shown a 12-minute news broadcast every morning, including 2 minutes of paid ads. But the honey-tongued, bow-tied Whittle came across as a slick huckster, and drew howls of outrage from parents and teachers who didn’t think commercials had any place in the classroom.

It didn’t help that the original Channel One newscast, replete with thumping rock music, looked more like a setting for the ads than for the news. Whittle’s media empire crumbled in 1994, and Channel One seemed an idea whose time had passed.

K-III Communications, better known for owning magazines like New YorkandSeventeen, picked it up for a fire sale price, $240 million less than the $250 million value of the 12,000 satellite dishes and 350,000 TV sets Whittle had given away.

K-III has quietly turned the entrepreneur’s quirky vision into a first-rate business.

First steps: Move the sales force and headquarters to New York from Knoxville and outsource the servicing of TV sets and satellites to local vendors. That shaved more than 20% from the budget. Under K-III, the news programming has also become more serious. No more expos&#232s on the contents of the average teen’s closet. Still, young reporters and broadcasters retain a certain scruffiness that appeals to teen viewers. They wear floppy flannel shirts instead of suits and don’t try to affect lofty detachment: When reporter Anderson Cooper, 29, stumbled into a pile of mutilated corpses during a broadcast from Rwanda last summer, he gagged.

Shortly afterwards, ABC News hired Cooper as its youngest correspondent ever. And last fall ABC News signed an agreement to exchange programming with Channel One. “It’s become a first-rate newscast,” says Jeffrey Cole, director of UCLA’s Center for Communications Policy. “The kids who watch know more about Bosnia than most adults.” ;

Ad rates to clients like Reebok, Gatorade and Nintendo now average $185,000 for a 30-second spot, up from $125,000 in the Whittle era and considerably higher on a cost-per-thousand viewers basis ($25) to what the major networks command. Makers of videogames, soft drinks and blue jeans use it to reach a captive audience each morning of 8 million, 40% of the nation’s teenagers.

The demographics are promising for Channel One, too. By 2005 the number of kids between 12 and 17 will grow from 22 million to almost 26 million the biggest spurt since the boom of the Fifties and Sixties.

Last fall Channel One signed up Sears, which is using the network to flog its Canyon River Blues private label jeans. “We get a friendly reception from people who were not on speaking terms with Channel One because of Whittle,” says Channel One Chief Executive David Tanzer.

Whereas Whittle barely broke even, Channel One last year earned $30 million on revenues of $70 million. “It’s moving much more quickly than I expected,” says K-III Chairman William Reilly, who claims that Channel One should be worth $1 billion in two years.

 

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