ATR: Policy Brief: The Clear Benefits of Channel One

Channel One is an original, daily, 12 minute news program created expressly for teenagers. It is beamed by satellite each night to about 12,000 public, private and parochial middle and high schools across the country. It is shown the next day on classroom television monitors to an audience of 8.1 million students, reaching 5 times as many teenagers as the daily news shows of ABC, CBS, NBC, and CNN combined.

In a 1998 study, Max Sawicky and Alex Molnar concluded that Channel One costs taxpayers across the country $1.8 billion each year. This study, however, was deeply flawed methodologically and its conclusions, therefore, are incorrect.

The truth is that Channel One involves no costs to taxpayers. It is a free service financed by 2 minutes of paid commercials during each daily 12 minute news program.

Indeed, taxpayers receive considerable net benefits from Channel One. First, the daily news program is used to educate students about current events, social studies, economics, geography, history and other subjects. Teachers and school administrators have heavily praised the program for its educational value, and it has won numerous prestigious awards.

Moreover, Channel One also offers subscribers several hours of optional, free educational videos each week covering a wide range of subjects and these videos are also heavily used by the schools. In addition, Channel One provides each subscribing school, also free of charge, with its own telecommunications equipment to receive and transmit the news program and educational videos. This equipment can then be used by the school for any other broadcast, video, or student activity it chooses.

This arrangement, therefore, greatly benefits taxpayers as well as students. As we will discuss, the value of the full range of benefits provided by Channel One is at least $425 million for the public schools alone. In fact, taxpayers should question schools that do not have Channel One as to why they have not taken advantage of the windfall from this market innovation.

These issues will be thoroughly discussed in this report. We will begin by first discussing in more detail Channel One and the service it provides. Then we will discuss the findings of Sawicky and Molnar, and why their analysis is flawed and their conclusions incorrect. In the process, we will analyze the true costs and benefits of Channel One.

Channel One provides a daily 12 minute news program for middle and high school students in about 12,000 middle and high schools across the country, including public, private and parochial schools. This covers about 40% of all middle and high schools in the country.

The news program is entirely original, produced by Channel One’s own staff and reporters on location around the world. The program is written and designed specifically to interest teenagers. It is beamed by satellite each night to the subscribing schools, and then shown on TV monitors in each classroom the next day. The daily audience includes about 8.1 million students, which is close to the daily audience of the major network evening new shows. Indeed, Channel One reaches 5 times as many teenagers each day as the news shows on ABC, CBS, NBC, and CNN combined.

No one is forced to watch Channel One. The program is available for prescreening each morning by school administrators and teachers. If the school considers the program inappropriate in any way, it doesn’t have to air it for students. If an individual teacher doesn’t want to use the program in their classrooms that day, they can opt their class out as well. If an individual student’s parents don’t want their child watching Channel One for any reason, the can choose to have their child opt out as well. In about 10 years of Channel One broadcasts, however, any such opting out has been negligible.

Each school that subscribes to Channel One receives about $25,000 worth of telecommunications equipment, so that it can receive and broadcast the daily news program to its students. This equipment includes a fixed KU band satellite dish, an addressable receiver, 19 or 25 inch color TVs in every classroom, VCRs, and internal wiring with complete maintenance by Channel One. Apart from Channel One’s daily news program, the school can use this telecommunications network for any other educational, training, or student programming it chooses.

In fact, Channel One provides hours of additional, optional, educational programming every day, including historical documentaries, biographies, and programs on mathematics, science, and art. This adds up to over 250 hours and more than 400 separate programs each year. In schools subscribing to Channel One, 97% of teachers report that they have used these videos, and two-thirds (66%) say they do so frequently. Buying the library of educational videos themselves would cost each school about $36,000 per year.

Students, teachers and administrators report a high level of satisfaction with Channel One. Remarkably, 99% of schools subscribing to the service renew their contracts each year. A 1994 study by the Institute for Social Research at the University of Michigan found 93% of teachers in schools using Channel One would recommend it to other schools. A more recent, 1999 study by Applied Research Consulting (ARC) found that after 10 years of operation now 98% of teachers in Channel One schools would recommend it. The same proportion, 98%, also wanted their schools to continue to receive Channel One. Channel One is now seen by over 400,000 teachers every day.

The study also found that 91% of these teachers think Channel One is valuable in informing their students about current events. In addition, 89% believe students learn more from Channel One than from news seen at home, and 80% regularly discuss the shows in their classes. Over 90% of the teachers also report that Channel One programs are appropriate for teenagers, interesting to teens, and driven by positive values. And 94% report that they believe Channel One reporters were good role models for their students

Among students, the ARC study found that 85% wanted their school to keep Channel One. The students reported that Channel One was educational, interesting, and their "No. 1 source of news." Over three-fourths of students also report that the information they learn from watching Channel One is as valuable or even more valuable than the other things they learn in school. A Gallup poll also found that 86% of teenagers thought Channel One was an "Excellent" or "Good" idea for their schools.

In the 1997-98 school year, Channel One correspondents broadcast original news segments from nearly 2 dozen countries around the world. Original interviews have recently included General Colin Powell, Newt Gingrich, Walter Cronkite, Mikhail Gorbachev, and House Speaker Dennis Hastert, who gave his only interview on his first day as Speaker to Channel One.

Channel One coverage focuses on aspects of stories that would be particularly interesting to teenagers. For example, the coverage of the death of Jordan’s King Hussein discussed the challenges Hussein faced when he became King as a teenager. The segment was also able to devote time to the history of Jordan, providing educational information to teenagers that helps them put the story in context. This would not be included in the more rushed network newscasts.

Channel One stories also cover positive role models for teenagers. Our story discussed a young man who climbed out of poverty and ended up at the U.S. Naval Academy. Another discussed a high school student who spent the summer doing volunteer work for Mother Theresa.

The philosophy of Channel One is to emphasize facts and in-depth coverage and avoid the sensationalism of much of TV news. TIME magazine reports,

Similarly, in a story entitled "Day v. Night", Brill’s Content Magazine last fall compared Channel One’s coverage of major news events quite favorably to the NBC Nightly News. Among other issues, the article noted Channel One’s sensitive treatment of the school shootings in Jonesboro, Ark. Afraid that extensive coverage might produce copycat shootings, Channel One delayed coverage while it consulted with teachers nationwide. It’s coverage then focused on how some students had heard of the shooting plot and failed to report it. The segment encouraged students to look out for signs of danger and report potential trouble. Channel One was also praised for its sensitive handling of the Clinton/Lewinsky story.

Channel One now has a formal cooperative arrangement with ABC News, sharing news coverage and resources. As a result, Channel One reporters have appeared on ABC News broadcasts, and Peter Jennings and Ted Koppel have co-anchored Channel One programs. Channel One has also worked cooperatively on news stories with Time magazine, U.S. News and World Report, and USA Weekend.

Channel One’s President of Programming is Andrew Hill, who holds a master’s degree in education and was formerly President of CBS Productions. In that capacity, he produced some of the best and most widely proclaimed family programs on television, including Touched by an Angel, Promised Land, and Dr. Quinn’s, Medicine Woman. The Channel One staff includes several other former major network news journalists and senior educators.

Channel One provides teachers with guides, calendars, lesson plans, academic resources, and other materials to help them integrate the news program and optional videos into their curriculum. A daily Educator’s Guide offers suggestions regarding how to incorporate upcoming news programs and educational videos into teacher’s lesson plans. It includes discussion questions relating to the newscast and the videos to promote classroom analysis after the programs are shown.

The Channel One service also includes a website for teachers offering daily lesson plans, academic resources, and discussion groups with other teachers around the country. It also provides analysis and sequencing questions to help develop critical thinking skills, and a daily writing assignment for students so teachers can use the news program to help develop composition skills. Another section helps teachers instruct students regarding vocabulary words used in broadcasts.

Teachers consequently do use the Channel One newscast as a starting off point for classroom discussions and instruction. It is obviously useful in this regard in Current Events and Social Studies classes. But it can also be useful in teaching geography, English, science and math. The educational videos, of course, are directly instructional in almost every subject.

Bruce Hunter, Principal of Washington Middle School in Seattle, Wash. Explains how and why his teachers use Channel One:

"We feel middle-school students don’t get enough information about the news…[Channel One] is an opportunity for us to give them that experience each day and use it as an opportunity to discuss current events."

Similarly, Jake Summerall, a teacher at Nazareth Academy in La Grange Park, Ill. writes,

From Phoenix City Middle School in Phoenix City, Alabama, teacher Nikki Robertson writes,

Cheryl Huddleston, a teacher in Hot Springs High School in Hot Springs, South Dakota also writes, "almost all of your topics have been relevant jumping off points for other discussions in my class."

Catholic schools have found Channel One highly beneficial as well. Monsignor John Jordan of the National Catholic Education Association writes,

"Channel One is a valued part of daily education in 1100 of our Catholic schools. Channel One is viewed daily by thousands of religious and lay teachers who monitor your programming. The traditional values you espouse are highly consistent with those we teach.

"The Channel One network helps to deliver our training programs to the thousands of teachers in our Catholic secondary and middle schools throughout North America. The Channel One Network, as a medium for this project, has opened up avenues for teachers to receive theology courses via live interactive television. Reaching over 1100 Catholic schools just through Channel One is …a real gold mine for Catholic schools.

The daily Channel One news show has now won over 200 journalism awards after just 10 years of broadcasts. These include the prestigious George Foster Peabody award, the Edward R. Murrow Responsibility in Television Award, the Faith and Values Award, the Christopher Award, and the Catholic Julian Award. For years, the Armed Forces Radio and Television Service has also broadcast Channel One’s daily news show to American personnel stationed in 156 countries around the world, including Germany, Italy, Turkey, Panama, the Azores, Japan, the Philippines, Australia, Korea, Cuba, Iceland, Spain, Greece, the Indian Ocean, and the Marshall Islands.

Some have criticized Channel One for the two minutes of advertising on its daily newscast, which finances the entire service – the news program, the educational videos, and the telecommunications equipment. But every newspaper and magazine used in a classroom contains numerous ads, as does the Internet, now used in schools as well. Ads are also found in student newspapers and yearbooks, at school sporting events, and on educational software.

The Channel One ads are standard network fare that students would generally have seen at home. Indeed, Channel One rejects as inappropriate some ads that are run on national TV. Channel One will not accept ads regarding tobacco products, alcoholic beverages, abortion, contraception, firearms, movies not rated G or PG, politics, prescription drugs, gambling, and others. Over the years, moreover, Channel One has run over $100 million worth of public service ads free of charge, for such causes as the Partnership for a Drug Free America, the Centers for Disease Control, the American Cancer Society, the Points of Light Foundation, the Center for Gang Violence, Mothers Against Drunk Driving, and the National Center for Missing and Exploited Children.

Most importantly, a study of this advertising issue by researchers at Boston University and Santa Clara University found that students understand that the commercials pay for the educational programs and that the school is not endorsing the products advertised. The students recognize this in regard to Channel One just as they do for ads in newspapers and magazines distributed in class, or in their student and hometown newspapers.

Educators generally seem to reach the same conclusion on this issue as the staff of the Kansas State Board of Education, which found,

American students benefit educationally from well-designed, well produced, and informative daily news programs designed especially for them. Such programming is technologically possible and economically feasible only through commercial marketing. It would be shortsighted to deny this opportunity.

Even though Channel One is provided to schools free of charge, Sawicky and Molnar conclude that " The twelve minute Channel One program costs American taxpayers $1.8 billion annually." This conclusion is completely erroneous. For while the authors prove adept at arithmetic, the data they have worked with have nothing to do with costs incurred by or for Channel One.

Sawicky and Molnar start with data on each state’s current annual expenditures for al public elementary and secondary schools. They then use data on average daily school attendance in each state to calculate an average annual expenditure per student. Then using data on the average length of a school day in each state, they determine what proportion of school time each day and then each year is used by Channel One’s daily 12 minute newscast. They then multiply this proportion by the average annual education expenditure per student in each state to determine a cost per student in each state for Channel One.

From this data, they then calculate a national average annual cost per student for Channel One of $229. They then multiply this by an estimate of the total number of public school students that view Channel One daily to reach a total annual public school cost for Channel One of $1.8 billion.

What Sawicky and Molnar have calculated is the proportion of total annual expenditures for the public schools that use Channel One equal to the proportion of annual class time in those schools represented by Channel One’s daily 12 minute newscast. This is a completely meaningless statistic. To say that it reflects the costs to taxpayers of Channel One is thoroughly fallacious as a matter of basic economics.

The costs that Sawicky and Molnar calculate are not variable or marginal costs incurred for or because of Channel One. They are fixed costs independent of Channel One that the schools have decided to incur whether or not they subscribe to Channel One. In other words, the costs that Sawicky and Molnar identify have nothing to do with Channel One. They are costs for teacher and administrator salaries, school supplies, books, and general school operations.

A valid economic analysis of the costs to schools of Channel One would focus on the variable or marginal costs for the school created by Channel One, not the fixed, general, aggregate costs the school will incur regardless of whether it subsidizes Channel One. The variable or marginal costs to schools for Channel One are zero. Again, Channel One charges schools no fee for its service. It also pays for, installs, and maintains all the necessary equipment to receive Channel One broadcasts. The school have to incur no new costs to accommodate or receive Channel One. Therefore, the true economic cost to taxpayers of Channel One is zero.

The same analysis applies to the 2 minutes of advertising on each 12 minute Channel One newscast. Sawicky and Molnar calculate that this portion of the newscast costs taxpayers $300 million each year out of the supposed total $1.8 billion Channel One cost. They determine this by just multiplying the supposed $18 billion total cost by the proportion of Channel One’s 12 minute broadcast devoted to commercials - one-sixth.

But this $300 million is just again the fixed costs of general school operations independent of Channel One, not any marginal or variable costs incurred as a result of Channel One. School across the country are not spending $300 million per year as a result of Channel One commercials. The marginal or variable costs to schools for Channel One commercials is again zero.

Sawicky and Molnar try to argue for their analysis by saying that time is money. But this nonanalytical slogan does not justify the economic fallacy of counting the general fixed costs of school operations independent of Channel One as the costs of Channel One. As a matter of economic analysis, the costs of Channel One to schools are the marginal or variable costs schools have to bear as a result of Channel One. As shown above, these costs to the school are zero. Therefore, the true economic cost to schools of Channel One is zero. To tell the public that costs for teacher and principal salaries, school supplies, books, and other general school operations incurred independently of Channel One are somehow the costs of Channel One is quite simply misleading propaganda.

If it could be shown that the Channel One broadcast has no educational value and is a complete waste of time, then the numbers that Sawicky and Molnar calculate could be considered a rough approximation of the economic value of that lost time. But Sawicky and Molnar expressly disavow any effort to make this argument, saying at the outset "appraising the educational value of Channel One is beyond the scope of this analysis" and later "We make no judgment on the educational value of Channel One."

Indeed, any such argument would be foolhardy, for the considerable evidence discussed above regarding the educational value of Channel One just scratches the surface of the available evidence. The 2 minutes of daily ads in the newscast have inspired some ideological opposition to Channel One on the grounds that it "commercializes" education. But no credible, qualified source raises any serious doubt that Channel One offers at least as much educational value as any other educational materials that might be used during those 12 minutes each day.

In fact, the real market evidence we have as to the educational value of Channel One is that 12,000 schools, with 400,000 teachers, representing about 40% of all secondary schools, have decided that the educational value of Channel One is well worth the 12 minutes of time each day devoted to it. In other words, a large and still growing number of the people who are in charge in the schools of deciding what has educational value have concluded that the educational value of Channel One warrants the time devoted to its use. To argue that Channel One has no educational value, Sawicky and Molnar would have to substitute their judgment for the judgment of all these professionals employed for their very expertise in making such decisions. There is no sound basis, as a matter of economics or otherwise, for such a substitution of judgment.

Might the 2 minutes of advertising included in the Channel One newscast at least be considered as lacking any educational value? These 2 minutes are an integral part of the Channel One service; indeed, they are the key part that finances everything else. They cannot be separated from the rest of the service and considered in isolation. The question that educators must consider is whether the educational value of the Channel One service is worth the 12 minutes each day devoted to the newscast as a whole. A huge and increasing number of professional educators employed to make precisely that decision are saying yes.

The two minutes of advertising on the Channel One newscast are analogous to the ads in newspapers and magazines that might be used in class, or the ads seen on the Internet or on educational software, or the credits on educational films. Students utilizing these resources may spend some time reading the ads or credits. But educators consider the time so spent to be de minimis, and to not deprive the materials overall of sufficient educational value for the time devoted to them. The same point applies to Channel One.

Indeed, any private news source must include some advertisements in order to pay the bills. To say that all such ads are to be banned from schools as not educational would amount to a ban on all private news sources in schools, as well as all student newspapers. The only source of news broadcasts or materials in classes would then be the government. This would not be desirable in a free, pluralistic, democratic society.

While Channel One involves no actual costs for taxpayers, it provides them with several clear benefits. First is the 12 minute daily newscast itself. As the discussion above indicates, this newscast has substantial educational value. Teachers use the newscast to teach current events and social studies, as well as economics, history, geography, and vocabulary. A large and growing proportion of professional educators charged with deciding what has educational value has determined that Channel One is well worthwhile. The newscast has won over 200 awards for its content, which is developed by top media professionals with network experience. While it is hard to put a number on the educational value of Channel One, that value is clearly substantial. It would cost schools across the country close to $15 million to replicate the daily news show. And that cost would not measure the full value of the programming to students.

Yet, while Sawicky and Molnar repeatedly state that they make no judgment or appraisal of Channel One’s value, in a discussion of the costs and benefits of Channel One, they assert that "the logical market value of Channel One’s programming is zero." Their discussion, then, credits no value to the Channel One newscast.

The authors reach this intellectual dead end by arguing that an alternative to Channel One is offered to schools by CNN: Newsroom-World View. Since this alternative is offered at no charge to schools, the authors conclude that the market value of the newscast provided by Channel One is zero. They conclude from this reasoning that there is no value of the Channel One newscast to weigh against their alleged costs of the program.

On this fallacious excuse for economic reasoning, there would be no value to the CNN newscast as well. Consequently, there would be no reason for schools to ever broadcast either news program. Indeed, on this reasoning, the "logical market value" of all cable and satellite TV services to homes would be zero, since a free alternative is available – the standard, over-the-air, broadcast networks and local TV stations. If Sawicky and Molnar had been advising Ted Turner, he would never have started CNN.

Moreover, the CNN newsfeed is not at all comparable to Channel One. CNN just splices together segments of its standard, daily, adult broadcast. It does not involve original programming designed to interest and inform teens. Nor does it involve accompanying materials to integrate the broadcast into the curriculum and assist in using it to educate, as Channel One does. It also, by the way, amounts to an advertisement for CNN, and is part of the company’s marketing strategy.

A thought experiment will clarify the issue quite succinctly. Suppose Alex Molnar offered to play first base for the St. Louis Cardinals for free next season. Would that mean that the "logical market value" of Mark McGwire as a baseball player would fall to zero?

Another major benefit of Channel One is the several hours per week, amounting to 250 hours per year, of free educational videos that Channel One subscribers can choose to receive from Channel One. These are purely educational videos covering a wide range of subjects. If a school were to purchase the 400 different videos Channel One offers each year, it would cost roughly $36,000. Alex Molnar’s own school, the University of Wisconsin, in fact spends thousands of taxpayer dollars each year buying many of the same videos Channel One offers for free, or videos from the same educational service and catalog that supplies Channel One. Over the 12,000 schools using Channel One, the yearly value of these videos would be over $400 million. For just the public schools using Channel One the value would be $360 million. Sawicky and Molnar completely ignore these educational videos in their study, and consequently, their analysis is incomplete and inadequate.

Finally, Channel One provides each school free of charge a full telecommunications network, including satellite dish, addressable receiver, TV monitors for each classroom, VCRs, internal wiring, and all necessary maintenance. Apart from the daily 12 minute Channel One program, this network is then fully available to the school for whatever use it chooses. Thousands of schools have taken advantage of the system to create in-house journalism programs. The market value of this telecommunications network is about $25,000. For the 12,000 schools that use Channel One, the total value of these systems is $300 million. For the public schools alone, the value is $250 million. Indeed, schools could not get this equipment and maintain it as inexpensively as Channel One, with its bulk buying and developed maintenance expertise. The CNN service touted by Sawicky and Molnar, by the way, provides no equipment to schools.

Sawicky and Molnar insist that an economic analysis must consider only the rental value of this equipment. But that would not change the analysis in any significant way. The present discounted value of proper rental charges will just equal the market purchase price anyway. Providing and maintaining the entire telecommunications network for free is a major benefit whether considering the purchase price or economically equivalent rental price of the equipment.

Consequently, while Channel One is provided at no cost to schools or taxpayers, it provides them with several major benefits. These benefits overall are worth at least $425 million for the public schools alone, providing a large savings for taxpayers. Channel One is quite simply a brilliant market innovation that greatly benefits schools, students, and taxpayers. Indeed, where schools are not using Channel One, taxpayers should question them as to why they are not taking advantage of this market windfall.

The true cost of Channel One to taxpayers is zero. Sawicky and Molnar’s cost estimate is thoroughly in error because it attributes independent costs of school operations, such as teacher salaries, administration, school supplies, etc, to Channel One, even though those costs are not incurred to accommodate Channel One and would be incurred regardless of whether the school subscribes to Channel One. That is not valid economic analysis.

While Channel One imposes no costs on taxpayers, it offers important benefits for taxpayers, students, and schools. It provides an original, daily, newscast that aids in the education of students on a broad range of topics. It provides a wide array of free educational videos that are heavily used as well. And it provides each school with a free telecommunications network that it can use as it chooses apart from the Channel One broadcast. The total value to the public schools alone of these benefits is at least $425 million.

As a result, Channel One is so beneficial that taxpayers whose school are not using it should question them as to why they are losing out on the windfall benefits from this major market innovation.