Faced with an uncertain economic future, nonprofit corporation Sesame Workshop is enacting a round of layoffs while it continues the search for a new home for Sesame Street. 

“Amid the changing media and funding landscape, we have made the difficult decision to reduce the size of our organization…These changes are necessary to ensure that the Workshop is poised to continue to deliver on its mission for years to come, but that does not make the human impact of these reductions any less painful,” says a Sesame Workshop spokesperson. “As production of our 56th season begins next month, we remain as committed as ever to bringing Sesame Street to children and families for decades to come.” 

This downsizing follows on the heels of 200-plus Sesame Workshop employees announcing that they were seeking union representation from the Office and Professional Employees International Union (OPEIU) Local 153. These employees include early childhood education experts, fundraisers, facilities staff, producers and paralegals. (Sesame Workshop writers already reached an agreement last year after a potential strike was called off.)

While the exact number of job cuts and departments affected is not yet known, this will be a considerable reduction, according to an internal memo that was sent to staffers yesterday. In the note, CEO Sherrie Rollins Westin explained that the end of the Sesame Street HBO deal in December, combined with other factors like “the policy changes affecting our federal funding,” have resulted in a budget gap for the org to fill.

“Given that our largest single expense is people and benefits, we must downsize significantly and make what we hope will be temporary changes to our benefits and bonus program,” Westin’s note stated. While eliminated US employees will be given their layoff notices today, a meeting will also take place next Tuesday to provide staffers with details on a “new organization structure and our plan to ensure the Workshop’s future ability to deliver on our mission.” 

No news has emerged yet about a new distribution partner for Sesame Street since the announcement that the output deal with HBO and Max would not be renewed—a move that was, in part, driven by a Max strategy to focus more on adult and family content rather than pure kids programming.

In a bid to increase the show’s appeal to young viewers, the upcoming 56th season will be pivoting to a more narrative-driven approach and a fresh format that is built on a pair of 11-minute stories instead of the existing magazine-style approach.