Massacre on Sesame Street

Sesame Workshop, the company that produces Sesame Street, suddenly laid off about 70 people yesterday — 20 percent of its workforce.

"This is an uncertain economic environment and we had to make some difficult decisions to reduce our overhead costs," said a company spokeswoman. 

None of the actors or puppeteers who portray the familiar characters of "Sesame Street" were affected. 

Rumblings among the staff at the children's TV company indicated that the layoffs may have been prompted by Sesame Workshop's $180-million decision last December to re-purchase licensing rights to well-known Henson Co. characters like Elmo, Big Bird and Cookie Monster from German conglomerate EM.TV. 

But the spokeswoman said the layoffs had "nothing to do" with the EM.TV agreement. 

EM.TV had spent a whopping $680 million to buy the Henson Co. in February 2000 before running into financial difficulties. 

The spokeswoman also said the cutbacks were not spurred by lagging toy sales. 

"We have a business model where we have revenue from our licensing business and we've always been extremely successful with that," she said. 

"It's a much more competitive environment now with a lot of media conglomerates," she said. "We will be seeking philanthropic and corporate money to help fund our [series]." 

This is the second dose of bad news for Sesame Workshop this year. In February, it let go 60 people from its $60 million magazine division, which publishes Sesame Street Magazine

Sesame Workshop used to be called Children's Television Workshop. The name was changed last year to reflect its most famous product, Sesame Street, which has been on the air since 1969. 

The company also produces Dragon Tales which, like Sesame Street, airs on PBS. 

In September, it will also bring Sagwa the Chinese Siamese Cat to PBS. 

CTW was formed in 1969 as a non-profit corporation to produce the then-revolutionary Sesame Street program for public TV. 

The idea behind the show was to use familiar TV conventions — like commercials and song-and-dance numbers — to teach young children the basics of reading. 

The show was an instant phenomenon, launching the Muppets and beginning the modern movement in kids TV.