• by Wayne Friedman , October 19, 2006

The somewhat genteel Hallmark Channel has something in common with tough-talking, hard-edged Fox News: the same prime-time viewership, about a 1.3 household rating, and roughly the same type of average viewer--generally middle America.

But the buck stops there.

Unlike Hallmark, Fox News gets much more from cable operators per subscriber. Fox News just got a major bump from Cablevision Systems Corp., which will now pay up to 75 cents per subscriber.

Hallmark isn't even close to such numbers; it gets just pennies per sub. However, Henry Schleiff--the new president/CEO of Crown Media Holdings, whose main asset is Hallmark Channel--believes Hallmark should be similarly compensated at Fox levels. "This means Fox has become my new most favorite nation," he says.

Getting subscriber fee increases is one of Schleiff's main initial goals for the network. "We represent the bill payer for the cable industry [as opposed to new digital cable networks]. Cable operators should embrace these cable networks," he adds, explaining his logic.

And Hallmark has a good story to tell--growing its ratings substantially, up 30% more over the past year, and regularly appearing among the top 10 cable networks in terms of household ratings. "We are the most cost-effective," says Schleiff, in reference to what cable operators get from Hallmark.

Plus, Hallmark does have something that media networks increasingly envy--control of a major off-air marketing distribution system: Hallmark Cards retail stores.

"We have the opportunity to work with our 4,000 stores and 52,000 outlets," says Schleiff. That's enormous. No other network has that. He's got another ace in the hole: a strong brand name. "Hallmark is the seal of good housekeeping."

And unlike his predecessors, Schleiff is willing to alter that imprimatur--even if it means enduring growing pains. "The good news is that we just need some fine-tuning," he says. "If along the way we lose some people, that's OK--as long as we keep the values of the network."

That's the good news. The bad news is that Hallmark gets many viewers in "C" and "D" counties--generally less upscale viewers. In addition, it has one of the oldest median ages of any cable network--61 years old. (Fox News is 62).

"We'd like to get that into the younger 50s or older 40s," says Schleiff, who believes more ad dollars will then come its way.

In addition, Hallmark has the unenviable task of trying to go it alone: It is an island among most cable networks. Unlike Viacom, Time Warner, NBC Universal or Fox, it doesn't have a stable of cable networks it can use to lure advertisers with packaged deals.

A second concern is its key demo group, women 25-54. "It is increasingly becoming the most important demo," says Schleiff. It's also the most prevalent of all TV viewer groups. Many cable and broadcast networks, in addition to Hallmark, target it.

Yet overall, Hallmark Channel is "one of the most under-marketed opportunities out there," says Schleiff--which is, in part, why he took the job. Schleiff had been chairman and CEO of Court TV from 1999 through 2006.

Over the past year, Crown Media Holdings failed in its efforts to sell Hallmark. Schleiff says parent company Hallmark Cards Inc. has given the network its full backing to grow the business. "They tried to get a premium price for the network, and it didn't work," he says. "Now, they have never been more committed to the network."