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Sesame Street: 1969

In 1969, television producer Joan Ganz Cooney and her staff at the Children's Television Workshop were impressed by the quality and creativity of the Henson-led team, so they asked Henson and staff to work full-time on Sesame Street, a children's program for public television that premiered on National Educational Television on November 10, 1969. Part of the show was set aside for a series of funny, colorful puppet characters living on Sesame Street, including Grover, Cookie Monster, Bert and Ernie, Oscar the Grouch, and Big Bird. Henson performed the characters of Ernie, game-show host Guy Smiley, and Kermit, who appeared as a roving television news reporter.

Henson's Muppets initially appeared separately from the realistic segments on the Street, but the show was revamped to integrate the two segments, placing much greater emphasis on Henson's work. Cooney frequently praised Henson's work, and PBS called him "the spark that ignited our fledgling broadcast service." The success of Sesame Street also allowed him to stop producing commercials, and he said that "it was a pleasure to get out of that world".

Henson was also involved in producing various shows and animation inserts during the first two seasons. He produced a series of counting films for the numbers 1 through 10 which always ended with a baker (voiced by Henson) falling down the stairs while carrying the featured number of desserts. He also worked on a variety of inserts for the numbers 2 through 12, including the films "Dollhouse"; "Number Three Ball Film"; the stop-motions "King of Eight" and "Queen of Six"; the cut-out animation "Eleven Cheer"; and the computer animation "Nobody Counts To 10." He also directed the original " C Is For Cookie " and Tales from Muppetland, a short series of TV movie specials that were comic retellings of classic fairy tales aimed at a young audience and hosted by Kermit the Frog. The series included Hey, Cinderella!, The Frog Prince, and The Muppet Musicians of Bremen.