News

Odyssey Parent Heads Down IPO Path

2/06/2000 7:00 PM Eastern

Crown Media Holdings Inc., the holding company for Odyssey,
A Henson & Hallmark Entertainment Network, plans an initial public offering to raise
$287.5 million.

The company told the Securities and Exchange Commission in
a filing that it would use the proceeds to expand distribution, to expand its
advertising-sales staff, to enhance technical facilities and to pay $30 million in accrued
and unpaid licensing fees to an affiliated company, apparently TV producer Hallmark
Entertainment Inc.

Along with Odyssey, Crown Media has two international
channels: Hallmark Entertainment Network and The Kermit Channel.

The company did not reveal how many shares it would offer
or at what price. That information is expected in future filings.

Crown Media's owners include Hallmark (61 percent), Liberty
Media Group (18 percent), the National Interfaith Cable Coalition (13 percent) and Chase
Equity Associates (8 percent), according to a filing at the SEC.

Odyssey is 22.5 percent-owned by The Jim Henson Co. Crown
Media owns the rest.

Odyssey's turbulent journey is spelled out in the SEC
filing. The network started out in 1995 as Faith & Values Channel, running mostly
religious programming. But it had trouble holding onto cable operators as ratings
plummeted.

After relaunching in April 1999 as Odyssey and obtaining a
$100 million investment from Hallmark and Henson, the channel has been able to lessen its
ratings slide.

Part of the reason is the addition of programming such as
movies and miniseries from Hallmark's and Henson's libraries, including hits Moby Dick
and Merlin. According to the prospectus, Hallmark Entertainment provided about 17
percent of Odyssey's programming fare in the fourth quarter of 1999, while Henson provided
about 8 percent.

The change in programming has helped to bring in a younger
audience, which is generally a plus to advertisers. In the third quarter of 1999,
viewership among adults aged 18 through 49 rose 44 percent, while viewership among adults
over 55 slipped 26 percent compared with the same period a year earlier.

Overall subscriber numbers declined by nearly 2 million in
1999, to 27.4 million from 29 million in 1998. But Odyssey has long-term agreements with
the two largest cable operators -- AT&T Broadband & Internet Services and Time
Warner Cable -- and it has distribution agreements covering roughly 35 percent of all U.S.
cable subscribers.

The added costs of relaunching the network have cut into
Odyssey's bottom line, as net losses increased more than 17 times in fiscal-year 1999 to
$55.1 million from $3.2 million in 1998. For Crown Media, losses nearly doubled from $56.7
million in 1998 to $94.6 million in 1999.

Revenue at Odyssey increased slightly during the year, to
$18.9 million in 1999 from $18.1 million the previous year.

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