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empty classroomPublic Schools Inc. - July 3, 2003

Chris Whittle, the self-styled "edupreneur" and CEO of Edison Schools Inc., has promised a profit -- the first ever for his company -- in the quarter that just ended on June 30. The results aren't in yet, but if he's correct, it will be a milestone in his controversial, decade-long effort to make an impact on American education by turning the management of public schools into a profitable business.

It would also cap a turbulent year that saw Edison attempt a historic takeover of as many as 70 Philadelphia public schools (the company now runs 20 there), only to see its stock collapse in a dramatic financial meltdown. As the deadline for profitability arrives, Whittle has proposed a plan to take Edison off Wall Street. The company's future is still very much a gamble.

In "Public Schools Inc.," 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.

The report traces Whittle's meteoric rise in the publishing and media industries from his beginnings in Knoxville, Tenn., 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.

Whittle's reputation as a media wunderkind was 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. "'You just declared war on education.'" The controversy soon spread nationwide, and both California and New York banned Channel One from their classrooms.

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 and other observers reacted positively, including Steven 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. "I think it was, and is, an enormously radical idea -- the idea that private sector entrepreneurs could run public schools and run them to a higher standard. The idea is perhaps no less radical now than it was then."

But Channel One had tarnished Chris Whittle's image among some educators, and others were dismayed by Whittle's latest idea. Ted Sizer, a leading school reformer whom Whittle had consulted in the early stages of the Edison Project, insists that for-profit education can't work. "The bottom line always comes first," he says, "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 insulate Whittle from the financial problems threatening to destroy his media empire. After laying off most of the staff of Whittle Commmunications, 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, Kan., 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 a longer school day and school year, and 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.

FRONTLINE recounts Whittle's efforts in the spring of 2002 to take over the beleaguered Philadelphia school system -- a move that would have provided enough schools to help make the company profitable finally. The documentary recounts the fierce opposition Edison encountered from unions, parents, and politicians before finally being awarded its largest contract ever. But the Philadelphia blessing would also prove to be a curse: Instead of being awarded a contract to manage 70 or more schools -- the number originally discussed -- Edison was granted a contract to manage just 20 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 14 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.

 

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published july 3, 2003

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