Crown Promotes Stewart to CFO11/09/2006 7:26 AM Eastern
Hallmark Channel’s parent, Crown Media Holdings, Thursday promoted Brian Stewart to executive vice president and chief financial officer, as the company also reported increased losses in the third quarter.
Stewart, formerly senior VPof finance for Crown Media U.S., has been serving as interim CFO since the departure of Bill Aliber, his predecessor, Sept. 30.
Crown had a net loss of $84.3 million, or 80 cents per chare, compared to $65.8 million (63 cents) in the year-ago period. Crown is saddled with roughly $1 billion in debt, and it recorded a $40.9 million noncash impairment charge for its film assets in the third quarter, stemming from the pending sale of its movie library to RHI Entertainment for $160 million.
“This additional impairment reflects a lower purchase price [for the library] than anticipated in the second quarter and reflects our agreement to retain certain obligations related to the payment of participations and residuals going forward,” Stewart said. “Obviously, the noncash impairment related to the film library materially impacted the net loss for the third quarter.”
Hallmark Channel enjoyed a good third quarter using several measures, such as ratings, ad sales and affiliate fees. The network registered its highest-rated quarter for ratings and household delivery for total day and primetime. Ad revenue for the quarter totaled $40.2 million, a 20% increase over the year-ago period, while affiliate fees hit $6 million, up 32% as free carriage periods expired for certain distributors.
The Crown conference call Thursday was the first for the company’s new president and CEO, former Court TV chairman Henry Schleiff. He and Stewart reiterated management’s continuing intentions to resolve Crown’s debt.
“This sale [of the library] begins to address the issue of reducing the company’s debt -- a challenge that we must begin to face head-on,” Schleiff said. “In addition, it allows us to focus our resources solely on the channels with an eye toward profitability and generating free cash flow.”
At one point, Schleiff said, “This network should be self-sustaining. This network should be profitable,”
He said Hallmark Channel earlier this year had enjoyed a strong upfront market, replacing “legacy” advertisers that had been paying low rates with 13 new ones, such as Macy's and Bank of America.
The network sold about 48% of its inventory in the upfront, compared with 50%-55% sold last year, and secured CPM (cost per thousand homes) increases of more than 8%, much higher than its cable peers, according to officials.
Schleiff said he’s begun a search to replace Paul FitzPatrick, Crown’s chief operating officer, who left the company last month.
He added that Crown is already talking to distributors about carriage-deal renewals for Hallmark Channel, since contracts with most of the network’s major affiliates expire the end of next year. While Hallmark Channel’s rate card is 17 cents per month, per subscriber, its so-called net effective rate is only three cents, in part due to free carriage periods some distributors have.