Accounting Change Prompts Crown Cut


Salomon Smith Barney Inc. media analyst Jill Krutick maintained her "buy" rating and $17 price target on Crown Media Holdings Inc., the parent company of Hallmark Channel, but revised her earnings estimates in light of new accounting rules. Like other media companies, Crown will have to report launch fees as net against revenue instead of as an expense, according to the new rules, effective Jan. 1. As a result, Krutick lowered her 2002 gross revenue estimate to $186.5 million from $200 million and her 2002 cash flow estimate to a $75 million deficit from a $70 million deficit. She stressed that the accounting changes were non-cash events and that "more carriage deals help Crown gain vital distribution, which help ratings and advertising revenues." Crown Media closed at $10.10 on April 30, up 18 cents.