Public Schools Inc.
Chris Whittle, the self-styled "edupreneur" and CEO of Edison Schools Inc., is promising a profit--the first ever for his company--in the fiscal year that ends June 30. If he succeeds, it will be a milestone in his controversial ten-year effort to revolutionize American education by turning public schools into a profitable business. It would also cap a turbulent year that saw Whittle attempt a historic takeover of as many as seventy Philadelphia public schools, only to see his company's stock collapse in a dramatic financial meltdown. As his deadline for profitability nears, Whittle has proposed a plan that would pull Edison off Wall Street to continue life as a private company, its future still very much a gamble.
In "Public Schools Inc.," airing Thursday, July 3, at 9 P.M. on PBS (check local listings), FRONTLINE and the PBS education series The Merrow Report join forces with The New York Times to investigate the intertwined fortunes of Edison Schools and its charismatic, controversial leader, Chris Whittle. Through interviews with educators, administrators, and observers on both sides of the debate--including Whittle himself--FRONTLINE examines whether it is possible to create world-class schools that turn a profit and explores whether the larger-than-life Whittle is Edison's biggest asset or its greatest liability.
"Like it or not," says correspondent John Merrow, "Chris Whittle is the symbol of the school privatization movement, and Edison's fate will affect the entire movement."
Correspondent Diana B. Henriques, a financial writer with The New York Times, says that as a businessman, Whittle has fascinated Wall Street for more than a decade. "With Edison, he invented an entirely new industry based on an unproven but intriguing concept--that investors can prosper by helping to reform American education," Henriques says.
"Public Schools Inc." traces Whittle's meteoric rise in the publishing and media industries from his beginnings in Knoxville, Tennessee, in the 1970s as co-publisher of a magazine aimed at the then-underserved youth market, and later his much-ballyhooed turnaround of Esquire magazine. It was a rise that was fueled primarily, observers say, by Whittle's extraordinary talent for salesmanship.
"Ninety-eight percent of the reason we invested was because of Chris Whittle himself, personally," says Philips Electronics executive Don Johnstone, who invested some $170 million in Whittle's plan to produce medical news programs to be aired in doctor's offices. "Chris has this unique ability...that he could take his perceptions, or if you want to call it vision, and he could turn it into reality for you. It's an amazing thing."
Whittle's reputation as a media wunderkind would be put to the test in the late 1980s, however, when the entrepreneur announced plans to launch Channel One, a news program targeted at students and broadcast free of charge directly to schools around the country. The catch: The service would be paid for by advertisers, whose commercials would be shown during the newscast.
Reaction to the plan was both swift and passionate. "A friend of mine called me and he went, 'Commercials in school televisions? You out of your mind?'" recalls Ed Winter, a former executive producer of Channel One who now heads his own marketing firm, U-30. "'You just declared war on education.'"
The controversy soon spread nationwide. "I think when New York and California both banned Channel One...and it was above the fold on The New York Times, I think I went, 'This is going to be controversial,'" Chris Whittle recalls. "And most people said, 'Quit right now' and said, 'It's never going to make it....' I said, 'No, there are forty-eight other states...this is a good idea, we're going to follow it.'"
The controversy over Channel One was rekindled when, in 1992, Whittle unveiled plans for what he called his "biggest idea ever," a plan to build and run a chain of 1,000 schools for profit. Whittle named it "The Edison Project."
Investors reacted positively, including Steve Wilson, who started his own school management company and is now a senior fellow at Harvard's Kennedy School of Government. "My thought was that this was an absolutely fantastic idea," says Wilson. "The notion of a private enterprise meeting public schools, and that entrepreneurs could tackle what after all is one of the largest and most poorly performing institutions in American life."
But Channel One had tarnished Chris Whittle's image among educators, including reformer Ted Sizer, whom Whittle had consulted in the early stages of the Edison Project. For-profit education can't work, Sizer says, because, "the bottom line always comes first, and in public schools children must come first."
To give the project credibility, Whittle convinced Yale University President Benno Schmidt to leave his university and head up the project. Yet credibility couldn't isolate Whittle from the financial problems that would threaten to destroy his media empire. After laying off most of his staff, Whittle was forced to sell the vast majority of his holdings, including Channel One and the Medical News Network.
The lone company Whittle kept was The Edison Project, which was then trying to establish its financial footing. And some insiders began to wonder whether Whittle's attachment to the project might no longer be an asset, but a liability.
"We needed to develop an entirely new source of funding," Schmidt says. "And I became convinced...that [Whittle] really needed to take a back seat at Edison for us to be successful."
It was a bitter pill to swallow, Whittle admits. "I had no official title, I had no authority," he says. "By the way, I owned half the company, but that didn't matter. And was that painful? For sure. And was it an indication of how much I cared, to go through that? I think so."
"Public Schools Inc." follows The Edison Project from its first contract to manage schools in Wichita, Kansas, to the present day, visiting some of the most successful--and not so successful--Edison Schools. FRONTLINE speaks with numerous principals, administrators, and parents, many of whom express their enthusiasm and support for the Edison model, which includes offering students a longer school day and school year, having students wear uniforms, and providing incentive pay for teachers and principals.
The documentary also examines some of the problems Edison began to encounter: from resistant teachers' unions to schools that weren't meeting expectations to the constant pressure from Wall Street to recruit the number of schools needed to make the company profitable.
"You couldn't afford to have people writing curricula, you couldn't afford to have people developing software applications for school management and for curriculum if you just had one or two client schools," Wilson says. "Your only hope is to amortize those big costs across many schools.
"Whittle has always been a man that has been driven by the grand idea," Wilson continues, "and [he] wanted very much to build a company quickly to scale that would incorporate hundreds of thousands of students. And to get there quickly, on a time frame that is compatible with investors...I think it was necessary to go after large school districts."
The beleaguered Philadelphia school district presented just such an opportunity. In "Public Schools Inc.," FRONTLINE recounts Whittle's efforts to take over the system--a move that would have provided the large number of schools necessary to help make the company profitable while satisfying investors. The documentary recounts the fierce opposition Edison encountered from unions, parents, and politicians before finally being awarded its largest contract ever with a school system.
But the Philadelphia blessing would also prove to be a curse: Instead of being awarded a contract to manage seventy or more schools--the number discussed at the beginning--Edison was granted a contract to manage just twenty schools, severely disappointing its already skittish investors.
The news sent Edison stock plummeting from $14 to just $1 in a matter of weeks; ultimately, the company's stock, which had once traded as high as $38 a share, was selling for just fourteen cents.
"A decade of work kind of went up in smoke," Whittle says. "For me to sit here and say that the loss of my entire net worth was not bothersome? I think it was bothersome. Yeah, it hurt."
Now, Chris Whittle once again finds himself forced to restructure, refocus, and consolidate in order to keep his big dream alive.
Yet he continues to maintain that his Edison Schools are misunderstood, particularly by investors. "Most people that look at us don't understand one thing: The great, great bulk of all our schools are profitable and they are generating cash, some of which comes back here [to headquarters]," Whittle says. "We just don't have enough of them yet."
Edison may yet fail. But if it does, Whittle says, "I'll do it all over again."
Following the broadcast, visit FRONTLINE's Web site at www.pbs.org/frontline/ for extended coverage of this story, including:
"Public Schools Inc." is a Merrow Report produced by Learning Matters in association with WGBH/FRONTLINE and The New York Times. The producer is John Tulenko. The correspondents are John Merrow and Diana B. Henriques.
FRONTLINE is produced by WGBH Boston and is broadcast nationwide on PBS. Principal support for this program was provided by the Annenberg Foundation.
Funding for FRONTLINE is provided through the support of PBS viewers.
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FRONTLINE XXI/June 2003
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