Schleiff: Hallmark’s Not For Sale

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Nearly three years after a failed attempt to find a buyer, Crown Media Holdings, the parent of Hallmark Channel, says it is no longer for sale, despite strong financial results and the renewal of several big carriage agreements.

Crown Media reported a 19% rise in revenue for the fourth quarter to $69.6 million and up 17% to $234.4 million. Crown also pared its cash flow deficit in the quarter – to $830,000 from $9.7 million in the same period in 2006. For the year, Crown reported a cash flow loss of $11.3 million, compared to a loss of $16.5 million in 2006.

The Hallmark Channel network also reported strong ratings growth for the quarter – the channel ranked eighth among all 69 ad-supported networks for Prime Time with a 1.2 household rating – which is continuing into 2008.

Crown Media CEO Henry Schleiff said that the channel had its best January and February ratings ever – placing in the top ten of prime time ad-supported cable networks for the 21st month in a row.

Crown also provided guidance for the next few years – in light of added clarity after securing carriage deals – adding that it expects to report as much as $50 million in positive cash flow in 2008. That cash flow number should rise to $85 million in 2009.

In August 2005, Crown Media began actively looking for a buyer, but took down the “For Sale” sign in 2006 after it failed to attract one due to its high price – estimated to be about $2 billion – and major carriage agreements representing about 60% of its base that were set to expire at the end of 2007.

Last year, the network was in talks with Time Warner’s Turner Networks, but no deal came out of those discussions.

While most of its carriage agreements have been renewed– only Cablevision Systems with about 2.1 Hallmark Channel subscribers remains – Schleiff said that the network has not returned to the auction block.

“The focus is on running our business in the best interests of the shareholders and the business. It’s not on whether we’re for sale or not for sale. We’re not for sale, and let me emphasize that,” Schleiff said in a conference call with analysts on Wednesday. “I think we had an extremely successful year securing our base. Obviously we are probably the singularly only large standing independent network out there.”

“That’s not to say we’re not attractive from a number of perspectives in the eyes of others,” he added. “What we did last year is what we’re going to do this year – focus on growing the Hallmark Channel business, especially advertising revenue line – and at the same time beginning to truly roll out Hallmark Movie Channel both in standard definition and as bandwidth becomes available, high definition. We think we have a real sleeping giant in Hallmark Movie Channel.”

Schleiff said that Hallmark Movie Channel is in about 8 million homes and that the HD version of the channel is expected to launch in April. The Hallmark Channel is available in 84 million homes – up from 74 million at the beginning of 2007 – making the network fully distributed.

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