I don't understand the the objection. Public TV licensed content. If they wanted to own the IP, they should have bought the content.
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.
The difference between subcontracting and embezzlement is the closeness of the relationship. If I receive public funds with the goal to advance public education and I use it to set up public schools, that is a valid pursuit of that goal. If I receive those same funds and use them as grants for private schools meeting specific goals, that can also be a valid pursuit of the goal. But I choose to direct those funds to private schools, and I sit on the board of some of those private schools, then that makes a strong case for it being embezzlement.
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.
I am proposing that public TV has overpayed for Sesame Street. It can be illegal when a nonprofit does that when paying rent on a building, but it is more difficult to value IP transactions.
Sesame Workshop did nothing wrong, public TV did by agreeing to such a contract at the beginning of their relationship.
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.
We can dig into past cash flows and argue about it, but I just want to a dress your final point.
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.
Why do you think public TV overpaid? If they didn't like the terms they could always not renew the license, and ultimately I guess they did.
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
“There’s nothing fraudulent as long as the buyers know they’e 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.
>However, public TV didn’t get the better end of this deal which is my concern as it demonstrates the obvious loophole.
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.
> 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.
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.
You changed my comment in your quote. You quoted me as having written, "not what happened HERE". But, I wrote, "that's not what is happening HERE" in present tense. This is currently happening, which is present tense.
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.
Some do, Saturday Night Live is a similarly long running and prolific show owned by NBC.
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?
In which year should they have renegotiated and how much of a premium should they have paid for total ownership? I think your argument is predicated on PBS being able to read the future and their partner being able to lose more control without the product suffering.
No. Directing funds to a private school you are a board member of makes zero case for embezzlement. It doesn't even hint at it. It may be unethical, but you aren't stealing the funds but are you misappropriating them. As you said yourself if the funds go to a private school it is fine.
I think it’s because a non-profit receives tax subsidies in that donations are tax deductible and they don’t pay income tax and frequently pay reduced property tax.
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.
Thats just an argument that Non-profits should exist.
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.
> 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.
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.
For profit companies can and do deduct employee taxes as a cost of business before calculating their corporate tax liability.
>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
Employee salaries and benefits (costs generally) not employee taxes.
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.
>Employee salaries and benefits (costs generally) not employee taxes.
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
I was thinking of the taxes that the employees pay. You're of course correct that employee costs--including salary, benefits, and the portion of their employment tax that the business pays are tax deductible business expenses.
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.