Whittle is best known as the man behind Channel One, which has brought television–and commercials–into the classrooms of 8 million teenagers. He helped make Esquire a quintessential ’80s magazine, produced specialty publications that drew oohs, ahs and anger on Madison Avenue and pushed advertising into virgin territory: the doctor’s office as well as the school. In 1991 he launched a massive education project that riveted national attention. For more than a decade, says Michael Winkleman, a media executive, “he has pushed the envelope.”
But now Whittle’s grandest scheme is faltering. The Edison Project was supposed to create a national chain of top-ranked, lowcost private schools. Whittle promised to make a profit for investors, redeem American education and prove that the free market can triumph over entrenched social problems. Last week Whittle said that he’d failed to attract any new investors and that Time Warner, an initial supporter, had backed off, leaving Whittle with millions of dollars less than he sought. Edison has emerged with a new, more modest, mission.
Edison’s parent company, Whittle Communications L.P., also has problems. Sales have dropped for the first time, and Whittle couldn’t get the $580 million he wanted to raise. Even Channel One, his most profitable venture, is vulnerable. Because Whittle’s company is private he can, and does, refuse to comment on profits, including reports of a loss. Calling himself “genetically upbeat,” he runs true to form: “The company has never lost a big bet,” he declares. “We just don’t roll over.” But, says a New York investment banker, that’s the old story. “He believes Ms own promotion.” Whittle the innovator may end up more celebrated as a master salesman who peddles, at best, hope and, at worst, hype.
Since 1969 Whittle has seemed to be the model entrepreneur. Right out of college, he and roommate Phillip Moffitt started a media company called “13-30,” for the ages it targeted, and turned around the faltering Esquire (chart). On his own since 1986, Whittle virtually invented the business of “place-based” marketing: most notably, his Special Reports magazines for doctors’ waiting rooms. By the end of the decade, he was building Channel One and also a $55 million headquarters in Knoxville, Tenn., to house even bigger things.
Whittle named the Edison Project for the great inventor, he said, because Thomas Alva had not just fiddled with the candle but had leaped forward to the light bulb. Likewise, proclaimed Whittle, his project would “invent and build a new American school,” providing superior education at public-school prices. With an initial investment of a staggering $2.5 billion, he would redesign education, from teacher training to kids’ desks. In 1996 Edison would open 200 new “campuses” with 150,000 students. Whittle partners Time Warner, Philips N.V. and Associated Newspapers anted up, and last spring Whittle snagged Yale president Benno Schmidt as his chief executive.
A year later, Schmidt wonders why reporters “use the words ‘scaled back’.” But here are the facts. Schmidt says they’ll be operating 5, 10, maybe 20 schools by September 1995, all of them existing schools that Edison will manage on contract. (Some private schools will come later.) The way Schmidt tells it, Edison was overwhelmed by educators calling for help and is only responding to what “the market is telling us.” Indeed, there is a growing clamor for outside management of schools. Massachusetts, for example, passed legislation in June providing for 25 such “charter” schools. But even a major Edison investor, who expresses complete support for Whittle, describes Edison’s change of heart differently. “The original concept was not achievable,” says Peter Williams of Associated. It yielded to “financial necessity [and] an enormous learning curve.”
It’s that learning curve that many experts pointed to–and hooted at–when Edison was announced. Whittle, committed to fresh thinking, hired a marquee cast, including one top NEWSWEEK editor, but only one person with experience in K-12 education; Schmidt never even attended a public school. Some of the thinking sounded less fresh than naive. Sure, Whittle was right that parochial schools educated kids better for less: they pick and choose their students. And did he realize he had to build all those schools?
Optimism is still running high. In five years, says Whittle, he hopes that Edison will be “the leader” in the business, with privately managed public schools constituting a national system. Whittle admits he was “the last to get on board” the revised plan, because “freedom” from rigid rules was “the whole idea” behind Edison, and he worried about losing control. Nonetheless, he vows not to compromise. Edison will hire and fire its own teachers, pay them almost 25 percent more than national averages and invest millions in refurbishing and equipping schools.
Whittle also shrugs at the competition, pointing to Edison’s massive development effort. There is so much demand, and so few contenders, he says, they won’t be “running into each other.” But Edison goes up against the most established player, Education Alternatives Inc., next week before the Milwaukee school board. EAI has been operating schools since 1987, and there are other firms and a host of nonprofit groups. Even Edison’s most fervent supporters, such as Massachusetts Gov. William Weld can’t guarantee contracts without considering public sentiment. Edison already has enemies. John Silber, who ran against Weld and is president of Boston University, which took over the Chelsea school district in an unusual experiment, calls Whittle a “huckster” who “wants to make money off public education.”
Whittle argues that the profit motive and an educational mission are a good fit. But he can’t even be sure he’ll raise the money to go on. He set out in January to raise $750 million, including $170 million for Edison. But he got only $40 million–to fund the next 18 months of Edison–from two of its three investors. Time Warner, which is trying to lower its own debt, didn’t contribute more and wants out of Whittle altogether. None of many new companies approached, among them Walt Disney, Paramount and McDonald’s, would buy into Edison or its parent at Whittle’s prices.
Whittle’s favorite response to critics of Edison is to point to Channel One. “Channel One is more successful than almost anyone knows,” says the New York banker. “It makes a ton of money.” Any school that promises to broadcast its 12-minute program, including two minutes of ads, gets free televisions. So far, Channel One has installed 350,000 in 40 percent of the nation’s secondary schools. Many advertisers say they are delighted, and Whittle says most have renewed contracts. But Channel One is banned in New York public schools, and, despite a $1.1 billion lobbying effort, Whittle could lose a critical 12.3 percent of the national market if California passes a similar ban in a legislative vote scheduled for later this month. Says the banker, “it’s a fragile franchise.” Some advertisers sound cautious. Pepsi’s new contract has a one-year exit option. “We don’t want to be shackled to something that isn’t wanted or popular,” says a spokeswoman.
Other ventures are clearly in the doldrums. Revenues from Special Reports and other print media have plummeted. In the mid-1980s Whittle was “the only game in town,” says Winkleman, of Faulkner & Gray publishers. But advertisers were skeptical of Whittle’s claims and, especially after competitors came in, his fees. Xerox, for example, found that it didn’t pay to continue sponsoring Whittle’s Best of Business magazine, and it closed. Whittle acknowledges the problems but says he is focusing on electronic media, with great success. But here, too, he has competition. Lifetime Cable is launching an interactive network for doctors that will compete head-on with Whittle’s Medical News Network.
Someday, Whittle wants to claim a generation of American children who grew up better because of his inspiration. To realize that dream, he’ll have to do a lot more homework.
Whittle always attracts the spotlight, but his report card is mixed. A sampler:
Whittle and his college roommate Phillip Moffitt team up to publish Knoxville in a Nutshell, a magazine for freshmen.
The Tennessee whiz kids buy the ailing Esquire for $3.5 million-and by 1983, it’s in the black.
The duo divorce. Moffitt gets Esquire; Whittle gets the specialty magazines that target narrow groups like students.
Launches Special Reports, aimed at doctors’ patients; Time Inc. invests $185 million in Whittle Communications.
Channel One, a TV network for schools, begins a test pilot, raising the ire of educators in several states.
Unveils the Edison Project, a plan to build 200 new, for-profit schools by 1996. Whittle figures it’ll cost about $2.5 billion.
As funding evaporates, he scales down Edison. The new blueprint: build fewer schools and go into the business of managing existing ones.
