Hallmark Misses The Mark, Crown Pulls Sale Of The Table

Hallmark has decided to hold its cards. Faced with a weak mergers and acquisitions market for cable networks, Crown Media Holdings, which operates the Hallmark Channel, has pulled itself off the auction block.

Instead, the company said it would rededicate itself to improving its operations and building its video-on-demand and high-definition TV businesses after some eight months on the block.

David Evans, president-CEO, said the company "determined that the greatest value for our shareholders will be derived by our continued operation of our business."

Separately, Chris Moseley, executive vice president-CMO of Hallmark Channels, will leave the company at the end of the month. Moseley, a former marketing executive at ABC, joined the company in 2000.

Crown Media, which also runs the fledgling Hallmark Movie Channel, is an anomaly in today's consolidated cable programming business, where media giants such as Time Warner and Viacom use leverage from groups of channels to strengthen their hand in ad sales and cable and satellite TV distribution negotiations.

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Crown Media reportedly sought $2 billion - nearly double the value Bank of America has placed on Court TV, which is in more homes and has similar ratings to Hallmark Channel. Crown, however, does have a significant programming library. In a sign of how soft the takeover market may be for cable networks, the asking price was well below the $5.3 billion Disney paid for the Fox Family channel and other assets in 2001, though Disney was widely criticized for overpaying for the channel, now known as ABC Family.

Investors showed their disappointment with Crown's perceived diminished value, driving the company's stock price down nearly 18 percent on news that the sale was a no-go.

The company posted revenue growth in 2005 with a 43 percent increase to $197 million, largely due to a 37 percent jump in advertising revenue to $146 million. But the company posted net losses of $233 million in 2005 and $317 million in 2004.

Ratings are on the rise for the family-oriented Hallmark Channel, as distribution has climbed to 72 million-plus homes. Household prime-time ratings this season are up 17 percent, while adult 25-to-54 ratings have climbed 50 percent.

But its prime-time median age is a hoary 61.1, something the company said it will work to lower over time. Evans said the company will "emphasize programming and marketing promotions to continue our efforts to target a younger audience."

Programming tent-poles include older off-network series such as "MASH" and "Walker, Texas Ranger," movies and offerings from the Hallmark library.

The Hallmark Channel has carriage agreements with distributors scheduled to expire soon and the company said it has begun efforts to renew those deals on favorable terms.

Crown Media is 67-percent-owned by greeting-card maker Hallmark Cards.

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