Muppets, Hallmark Help Odyssey

7/05/1998 8:00 PM Eastern

The Odyssey Channel will relaunch -- most likely with an
increased focus on family, rather than religious fare -- as the result of a $100 million
infusion of cash and programming from Jim Henson Co. and Hallmark Entertainment.

The deal gives the two companies an outlet for their
programming, without having to start from scratch, noted Jedd Palmer, MediaOne's
senior vice president of programming.

Odyssey said last week that there was a letter of intent
for Henson and Hallmark to acquire a 45 percent stake, or 22.5 percent apiece, of the
interfaith channel.

When the restructuring is completed, current Odyssey owners
Liberty Media Group and the National Interfaith Cable Coalition will hold stakes of 32.5
percent and 22.5 percent, respectively. The NICC is a consortium of nearly 70 Protestant,
Jewish, Catholic, Eastern Orthodox, Evangelical and Pentecostal faith groups and
traditions. Currently, Liberty and NICC hold 49 percent and 51 percent, respectively.

Under the proposed deal, programming such as movies and
miniseries from Hallmark's and Henson's libraries -- such as ratings hits Moby
and Merlin -- will be used to bolster Odyssey's schedule.

Henson and Hallmark have been looking for a way to make a
foray into a cable-network venture in the United States. In February, Henson hired former
Fox Kids Worldwide vice chairman Margaret Loesch as president of the Henson Television
Group. Under her purview, Henson is already partnering with Hallmark on The Kermit
Channel, a premium service that will launch in Latin America and Asia this fall.

Both Henson and Hallmark said they will be making an
announcement in the next few weeks about the future of Odyssey.

"It's a great deal," Palmer said.
"Odyssey has been an underperforming product ... [now] the service should go off like
a rocket."

In a prepared statement, the NICC said it will continue to
showcase its faith and values programming on Odyssey. Hallmark and Henson can't
completely revamp or abandon Odyssey's religious programming, because that would
violate the network's deals with operators.

Odyssey is already airing such off-network shows as Trapper
John, M.D.
By adding more family-oriented fare, Odyssey will be joining two other
programmers that are gearing up as family channels in August -- Fox Family Channel and
Paxson Communications Corp.'s Pax Net.

A Liberty spokeswoman pointed out that Hallmark's and
Henson's $100 million investment in Odyssey highlights the value of its analog
distribution, as the network is in more than 30 million homes.

Officials at two of Odyssey's competitors in the
religious-programming arena -- INSP-The Inspirational Network and Trinity Broadcasting
Network -- were happy to hear about Hallmark's and Henson's investment in the

"We have gotten a lot of switch-outs [from
Odyssey]," said Tom Hohman, INSP's vice president of affiliate relations.
"Operators saw Odyssey abandoning the [religious] category. They want a network that
fills that genre 100 percent of the time."

Odyssey has been without a permanent president and CEO
since Garry Hill died last June. Hallmark and Henson are expected to bring in new

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