School Project at Heart of Whittle’s Empire : Education: A media baron who made his millions advertising to specialized audiences now wants to focus his company’s resources on revolutionizing American education.

If you are a junior or senior high school student, you may see “Channel One,” a 12-minute daily current-events program that carries commercials for soft drinks, candy bars and acne medicine into 10,500 schools in 48 states.

If you visit a pediatrician, obstetrician or gynecologist, you could be exposed to “Special Reports,” an hourlong television program of news, features and chit-chat now shown in 32,000 doctors’ offices.

If you are a corporate chief executive, you probably are receiving--whether you want them or not--books that tell you how to improve relations with your board of directors or set executive salary levels. Each book contains 18 pages of ads for Cessna Corp., which hopes that the CEOs will buy their airplanes.

All of these seemingly disparate enterprises are the brainchildren of media entrepreneur Christopher Whittle, who has amassed a fortune selling advertising to specialized, sometimes captive, audiences in bars, ballparks, dentists’ offices, classrooms--almost every place imaginable.

The ventures are based here in eastern Tennessee, where the 45-year-old communications baron has built a $55-million, Georgian-style headquarters, two blocks long and a block wide, in the middle of Knoxville’s otherwise undistinguished downtown. “Colonial Whittlesburg,” some call it.

Whittle, who has homes in Knoxville, New York City and East Hampton, Long Island, is a millionaire many times over, having received a reported $40 million personally when Time Inc. (now Time Warner) bought half of his company for $185 million in 1988.

Whittle is devoting much of his time now to raising the $2 billion to $3 billion needed to finance the Edison Project, a chain of for-profit private schools that he hopes will revamp American education. Plans for the ambitious effort, which may be the largest start-up in American business history, call for 100 campuses by 1996 and 1,000 by the year 2010.

Some Whittle executives are concerned that the Edison Project might drain money and energy from other company ventures. The privately owned Whittle Communications does not release profit-and-loss statements and, according to a recent report in the trade publication Advertising Age, its profit is not “much to brag about.” But the company grossed about $230 million last year.

Whittle, during a recent interview in his Manhattan office, insisted that his latest foray into the education realm will not hamper the company’s other businesses.

“Exactly the reverse,” said Whittle, wearing a sweater and his signature bow tie. “Major new ventures, if done right, actually focus the core business because the core business understands they are going to be called upon to fund the new company.”

His attempt to reform American schools has brought Whittle a long way from the Knoxville pillow factory where, in 1970, he and several other young University of Tennessee graduates published a guide titled “Knoxville in a Nutshell,” Whittle Communications’ first venture.

They called the company “13-30,” which referred to the age group Whittle and his friends were trying to reach, and began to publish other guides, each with a single advertiser. Sony paid for a “student guide to music,” Datsun (now Nissan) for a “student travel guide.”

This became the company trademark: specialized publications, often supported by a single advertiser. In the next few years, 13-30 launched a series of special-interest publications, ranging from “Pet Care Report” to “Parenting Adviser,” and expanded into “wall media”--large posters that contain advertising and some editorial material. Later came a general circulation magazine--Esquire--books, then television.

Last month, Whittle began phasing in operation of Medical News Network, a package of high-tech gadgetry to be financed by pharmaceutical companies that will enable physicians to catch up on the latest developments in their specialties without leaving the office.

With “Channel One,” “Special Reports” and now Medical News Network, Whittle Communications has moved away from print to become predominantly an electronic media company, a transition that not everyone has survived. Last spring, about 100 employees, about 10% of the work force, were dismissed. These were the first layoffs in company history, and Whittle takes some of the blame.

Many top management salaries were cut this year but they are still high. Benno C. Schmidt Jr., former president of Yale University, reportedly is being paid between $400,000 and $800,000 a year to run the Edison Project, which neither Schmidt nor Whittle will confirm.

Through the years, Whittle has executed a number of nimble financial maneuvers to gain more working capital, selling parts of the company, buying them back, then selling them again.

Today, 37% of Whittle Communications belongs to Time-Warner; 25% to Philips Electronics, a Dutch firm; 24.6% to Associated Newspaper Holdings of Great Britain, and the rest to Whittle and his partners.

Whittle’s most successful enterprise--”the engine that pulls the rest along,” as Vice Chairman Jerry Hogan put it--is “Channel One,” which on a daily basis brings 10 minutes of news and features and two minutes of commercials into more than 10,000 junior and senior high schools, with a potential audience of more than 7 million teen-agers.

Now in its third year, “Channel One” generates more than $100 million in annual revenue--40% of total Whittle Communications income. At least 90% of its commercial time, which costs $157,000 for a 30-second spot--has been sold for the current school year. In a recent month’s worth of programs, there were eight commercials for Burger King, four for Pepsi and three each for Snickers and M&M;’s candy and for Doritos chips.

Whittle installs a satellite dish, two VCRs and a 19-inch color television set for each 23 students--$35,000 to $50,000 worth of equipment--at a subscribing school. In return, the school agrees to show “Channel One” during classroom or homeroom time.

From the start, “Channel One” has encountered a blizzard of criticism from educators and others for commercializing American classrooms. The National Education Assn. and the Parent Teacher Assn. oppose use of the program. It is banned in New York State public schools and has encountered stiff battles in California, New Jersey, North Carolina and Texas.

Many educators and others worry that Whittle’s success in placing advertising where it never has appeared before may extend to his Edison Project classrooms, turning American education into a huckster’s paradise. Even some members of the Edison planning team had doubts initially.

But Whittle contends that his company “has always been in and around educatin,” and he disagrees with those who fear that he is trying to privatize schooling.

“We are not trying to do that,” he said. “What we are trying to do is come up with average-price, high-quality education that can be applied in a wide variety of settings.”

An Edison planning team member, former Esquire magazine Editor Lee Eisenberg, said: “Chris is no white knight. But he sees a social need and a real market here.”