Ever wonder how a giant purple dinosaur became a multi-billion-dollar empire? It didn’t start with a corporate boardroom or a massive venture capital infusion. In fact, if you go back to 1988, the "funding" for Barney was basically just a guy writing a check for his daughter-in-law.
Sheryl Leach had this vision for a preschool video series. She was a teacher, not a media mogul. When she pitched the idea of a dinosaur named Barney to the board at DLM, Inc. (where she worked), they basically told her "no thanks." But her father-in-law, Richard C. Leach, saw something they didn't. He bankrolled the first three home videos with roughly $1 million of his own money.
That’s how the Barney & The Backyard Gang videos started. No TV. No PBS. Just VHS tapes sold in toy stores and boutique gift shops.
The "Barneygate" Scandal and Public TV Money
By 1991, Barney was doing okay—about $3 million in annual sales—but it was still a Texas thing. Everything changed because of a video rental in Connecticut. Larry Rifkin, an executive at Connecticut Public Television (CPTV), saw his daughter mesmerized by a Barney tape. He realized PBS was looking for preschool content and called Sheryl Leach.
Sheryl reportedly asked, "PBS? Tell me what that is."
Once they got on the national airwaves in 1992, things got messy. The first 30 episodes of Barney & Friends were funded by a $2.25 million grant split between PBS and the Corporation for Public Broadcasting (CPB). The Lyons Group (Sheryl's company) and CPTV kicked in another $2 million via deficit financing.
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Here’s where it gets wild: PBS almost cancelled the show after season one.
The network thought it wasn't worth the investment. But the "Barney Moms" and local stations revolted. They flooded PBS with letters and calls. PBS eventually caved and renewed it, but they didn't realize they were sitting on a goldmine. Because PBS didn’t negotiate for "backend" rights on toys and merchandise in those early years, they missed out on a literal mountain of cash.
Why the Senate Got Angry
By 1993, Barney was a cultural phenomenon. Retailers moved over $500 million in Barney gear. Politicians like Senator Bob Dole started using the term "Barneygate." They argued that if a show was making hundreds of millions in toy sales, why was the federal government still giving it taxpayer money?
They called it "profiteering." In reality, the actual net income to the producers was in the tens of millions, not billions, and PBS was only getting a tiny slice of that.
Where the Money Actually Came From (Underwriters)
Public television can't run "commercials," but they have "underwriters." You probably remember the little clips at the beginning and end of the show. Those weren't just for show—they were the lifeblood of the production budget.
- Kimberly-Clark Corporation: They were the first big fish, putting up $795,000 for Season 2.
- JC Penney: They weren't just a place to buy jeans; they were a massive sponsor of quality children's programming for years.
- Dannon Danimals & Teddy Grahams: As the show moved into the late 90s and early 2000s, snack brands started footing the bill to reach parents of toddlers.
- The Corporation for Public Broadcasting: Even though they stepped back from "production" funds later on, they still provided grants to keep the lights on.
By the time Season 3 rolled around, PBS got smarter. They renegotiated the contract to ensure they got a 30% cut of net income from audio and video sales. They also made sure the Lyons Group guaranteed that public TV would recoup its spending. Basically, by 1998, PBS was airing the show for free because the royalties covered the costs.
Corporate Takeovers: From Lyons to Mattel
The funding structure changed drastically as the dinosaur changed hands. The Lyons Group became Lyrick Studios, which was eventually swallowed by HIT Entertainment in 2001 for a staggering $275 million.
Suddenly, the "funding" wasn't about grants and "Viewers Like You"—it was about corporate synergy. HIT Entertainment (which also owned Thomas & Friends) was eventually bought by Mattel in 2012 for nearly $680 million.
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Today, the funding for new Barney projects (like the 2024 relaunch Barney's World) comes directly from Mattel’s massive media budget and distribution deals with platforms like Max and Cartoon Network. The "public" part of the funding is long gone.
The Real Cost of a Purple Dinosaur
Producing a show like this isn't cheap. In the early 90s, it cost about $4.5 million to deliver a 30-episode season. If you adjust that for 2026 inflation, you're looking at over $10 million just for production. That doesn't include marketing, which Sheryl Leach famously did herself in the beginning by going "Blockbuster to Blockbuster" asking managers to put her tapes on the shelf.
Actionable Takeaways for Media Creators
If you’re looking at the Barney model for modern content, here is how the money actually moves:
- Grassroots Financing Works: Don't wait for a network. Sheryl Leach proved that local success (Texas) and family funding can create enough leverage to get a national deal.
- Negotiate Your Backend: If you have a hit, the real money is in the "ancillary" rights—toys, books, and lunchboxes. PBS's failure to secure these early on is still studied as a business "what-not-to-do."
- Underwriting is a Partnership: Sponsors like JC Penney stayed for years because the audience was perfectly aligned. If you’re seeking funding, find a brand that wants to talk to your specific viewers, not just "everyone."
- Ownership Transitions Matter: Every time Barney was sold (to Lyrick, then HIT, then Mattel), the creative direction shifted to match the new owner's financial goals.
The story of Barney's funding is really a story about the transition from a "mom-and-pop" video project to a global corporate asset. It started with a teacher's dream and ended up in a billion-dollar toy company's portfolio.