After many difficult months, “Sesame Street” has a moment to celebrate.
“Sesame Street,” the 56-year-old institution of children’s television, has signed a new distribution deal with Netflix, as well as a separate deal with PBS, the show announced on Monday.
That means new episodes of “Sesame Street” will now be available to the more than 300 million subscribers of Netflix, giving the program significantly more reach than in the past. New episodes will also be available on PBS the day they are released on Netflix, the first time in roughly a decade that the public broadcaster will have access to brand-new “Sesame Street” content. The new agreements will go into effect later this year.
The deal is a much-needed shot in the arm for Sesame Workshop, the nonprofit that produces “Sesame Street” and has been in the throes of a financial crisis. Sesame Workshop laid off about 20 percent of its staff this year after several grants dried up, and, more significantly, it confronted a significant loss in revenue with the expiration of its current distribution deal, a lucrative contract with HBO.
Since 2015, HBO has paid Sesame Workshop $30 million to $35 million a year for new episodes of “Sesame Street,” The New York Times reported. But Warner Bros. Discovery, HBO’s parent company, let that deal expire as it turns away from children’s content and faces financial challenges of its own.
It was not immediately clear how much Netflix paid to distribute the show. But Sesame Workshop executives have warned employees for months that any new distribution agreements would bring in less revenue than the old HBO deal.
In a note to staff, Sherrie Westin, the chief executive of Sesame Workshop, said it was “certainly worth celebrating” that the show would be available in many more households. But, she added, “the economics of these agreements are vastly different than those of the past, given the drastic market and media landscape shifts in recent years.”
The Netflix and PBS pact ends an extended odyssey. About a year ago, Sesame Workshop executives had anticipated finding a new distribution partner within a few months, and they entered discussions with all of the biggest players, including Netflix, YouTube, Disney, Amazon and NBCUniversal.
But it quickly became apparent that a deal would be much harder to come by. A big part of the problem was the sudden death of “Peak TV,” when media companies drastically increased their spending on programming to draw streaming subscribers. Many media companies have now reduced their investments in producing or licensing new shows as they try to wring out profits from their streaming services.
Warner Bros. Discovery dropped the $30 million to $35 million deal that it made with Sesame Workshop at the height of Peak TV and instead signed a $6 million-a-year deal for back library episodes to the show last year.
Between the reduced revenue and the Trump administration’s abrupt cancellation of some grants, Sesame Workshop found itself in a deep financial crisis. As the organization made cuts, its administrative staff successfully unionized.
“Sesame Street” also confronts a more competitive children’s television landscape than when it reached the HBO deal. According to an internal Sesame Workshop study reviewed by The Times, “Sesame Street” ranks below many other children’s shows in overall engagement, including “Bluey,” “PAW Patrol,” “Peppa Pig,” “Baby Shark,” “Cocomelon” and “Blippi.”
YouTube is also awash in children’s content, including “Ms. Rachel,” a hit show that Netflix began licensing last year. “Ms. Rachel” has become a standout series on Netflix in just a matter of months.
Given all of the competition, “Sesame Street” will unveil a revamped show later this year, with fewer segments and more animation.
The new deal will give “Sesame Street” greater reach than it had under the HBO deal. Netflix has more than 300 million subscribers, while Max, soon to be renamed HBO Max, has about 122 million. Netflix will get access to new episodes of the reimagined 56th season, which is in production, as well as 90 hours of library episodes. The company also said it would be able to develop games for “Sesame Street.”
Netflix is doubling down on children’s content, which the company has said accounts for 15 percent of viewing on the service. On Monday, the streaming company announced the release of a new game dedicated to “Peppa Pig.”
A separate deal with PBS will give the public broadcaster and its digital channels access to episodes the day they are released on Netflix. Under the HBO deal for the past decade, PBS could release new episodes only many months after they first appeared on cable or streaming.
“I want to most sincerely thank every Sesame team member who worked tirelessly for so long to finalize these agreements,” Ms. Westin, the Sesame Workshop chief executive, told staff members on Monday.
She added: “It wasn’t easy.”
