Sesame Workshop, the nonprofit behind Sesame Street, is grappling with financial turmoil as it loses its lucrative contract with Warner Bros Discovery Inc’s WBD HBO, which had provided $30-35 million annually for a decade, according to a report by The New York Times.

What To Know: The end of this deal comes at a time when the streaming industry is contracting, with major companies cutting back on spending.

Adding to the crisis, the Trump administration's cuts to the U.S. Agency for International Development eliminated some key grants, while Sesame Street struggles to compete with newer, high-performing children's shows like Bluey and Cocomelon.

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Internal documents reviewed by The Times indicate that without cost-cutting measures, the organization would face a $40 million deficit next year.

To stabilize operations, Sesame Workshop recently laid off nearly 100 employees—about 20% of its staff—and drew $6 million from its investment fund for the first time in over a decade.

Amid the turmoil, Sesame Street is set for a reimagined 56th season with a new format emphasizing comedy, music and animation. CEO Sherrie Westin, who became chief executive last year, remains confident that the organization will adapt and find a sustainable future.

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