Lacking capital, PBS sells its Business Channel

Originally published in Current, June 21, 1999
By Steve Behrens

PBS is exiting active involvement in the Business Channel, which it hoped would become a profitable leader in corporate staff training through distance learning.

The for-profit PBS subsidiary will be merged into the National Technological University Corp., a larger distance-learning operation that serves the nation's major engineering schools.

The ingredient that PBS's Business Channel lacked, which NTUC has, is substantial outside investment, said Business Channel President Jinny Goldstein. The Williams Companies, a $2.8-billion fiber-optic and petrochemical pipeline operator, ended its backing of the Business Channel late last year after two years.

NTUC, like the Business Channel, is a for-profit affiliate of an established nonprofit—Colorado-based National Technological University—but unlike PBS's Business Channel, it has capital. NTU created NTUC last July with a $15 million investment from Olympus Partners, a Stamford, Conn., venture capital firm. John C. Farrell, a 30-year IBM Corp. executive who headed its in-house training in North and South America, was named president, and NTUC took over all of NTU's operating functions. Olympus owns about a third of NTUC, according to NTUC spokesman Jim Boyle.

In exchange for stock in NTUC and a seat on its board, PBS will give it the use of the PBS Business Channel name for 10 years and transfer the channel's assets. Farrell said NTUC is picking up the PBS Business Channel's business plan and running with it.

A number of Business Channel staffers will work for NTUC out of offices in PBS's headquarters in Alexandria, Va., according to Farrell. Goldstein, the longtime PBS education executive who's overseeing the transition in the next few weeks, said she hasn't decided her own plans.

"This is a nice fit for us," NTUC's Farrell told Current last week. It broadens its customer base and curriculum from technology into general management, while acquiring the PBS brand, which "has great cache for live programming from top-notch presenters."

The corporate training market is demanding employees with this broader set of skills, Farrell said: "technical people who need more managerial and 'soft' skills and education, and business people needing to have a greater understanding of the technical community, because those two are merging."

The merger will take advantage of NTUC's greater volume of courses—20,000 hours a year, going out in as many as 12 simultaneous compressed video streams on a single satellite transponder, according to Boyle. PBS's Business Channel was offering 800 hours a year.

Growing out of the nonprofit NTU founded in 1984 by Lionel Baldwin, engineering dean at Colorado State University, NTUC still does 70 percent of its business in graduate-degree credit courses, often on highly specialized topics, offered by satellite to technical personnel in corporations around the country. Short courses make up the remaining 30 percent of its business, Farrell said.

The Business Channel offered training on manufacturing processes and ergonomics, Internet commerce, innovation, customer service, personnel issues, Y2K planning, project management and other topics, including certificate programs from the Massachusetts Institute of Technology. It began with many live satellite feeds featuring such business gurus as Tom Peters, according to Goldstein, but was following the market toward short training segments delivered via the Internet that include testing of student knowledge both before and after the training.

"Corporations wanted competency-based programs with clear learning objectives, where the learning can be assessed," said Goldstein. "What used to be 'nice to know,' they now want 'must know' and 'must be sure that it's learned.'"

Such training modules were delivered directly to the corporate employee's desktop via the Internet, recently using the streaming-media servers of, she said. But the vision of broadband fiber-to-the-desktop, which had attracted the Williams Companies, has not yet developed.

Williams left the limited liability corporation last December after deciding to throw its efforts into expanding fiber-optic transmission capacity, rather than developing content as a way of building transmission demand, Goldstein said. Williams also sold its other content initiatives, she said.

PBS launched the Business Channel in 1989 and converted it to a limited liability corporation, announcing a $20 million commitment by Williams in 1996. The joint venture began operating in July 1997. Goldstein declined to discuss financial results.

Goldstein said PBS realized from the start that it would need an investor willing to back the Business Channel while protecting PBS from risk. Guided by a PBS Board working group, the network hired an investment banking firm to find a new partner, reviewed several that expressed interest, and chose NTUC. NTUC and the Business Channel signed a merger agreement June 10 after approval by the PBS Board June 5. Farrell said the merger is planned to occur July 1.

PBS was able to "secure a prestigeous roster of clients and an extraordinary group of content providers," Goldstein said.



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Earlier news: PBS announces Business Channel partnership with the Williams Companies, 1996.


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