• by Wayne Friedman , February 27, 2007

The somewhat genteel Hallmark Channel has a lot in common with tough-talking, hard-edged Fox News. Henry Schleiff--the new president/CEO of Crown Media Holdings, whose main asset is Hallmark Channel--says both nets have about the same average prime-time viewership (a 1.3 household rating), and roughly, the same type of average viewer (generally mid-America).

But that's where the two part ways.

Unlike Hallmark, Fox News gets much more from cable operators per subscriber. Days ago, Fox News improved its situation, getting a major bump from Cablevision Systems Corp--up to 75 cents per subscriber from around 25 cents, according to press reports.

Hallmark isn't even close--getting just pennies per sub. Schleiff believes Hallmark should be similarly compensated: "This means Fox has become my new most-favorite nation."

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

Hallmark has a good story to tell--growing its ratings substantially, up 30% over the past year. Plus, it regularly appears 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.

That's the good news. The bad news is that Hallmark gets many viewers in "C" and "D" counties--generally lesser upscale viewers. In addition, it has one of the oldest median ages of any cable network: just under 60.

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

The company has the unenviable task of trying, in essence, to go it alone. Hallmark is an island among most cable networks. Unlike Viacom, Time Warner, NBC Universal or Fox, it doesn't have a big stable of cable networks that is sometimes used to help lure advertisers with packaged deals.

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

"We have opportunity to work with our 4,000 stores and 52,000 outlets," says Schleiff. "That's enormous. No other network has that." He says the Hallmark Channel also has something more: a strong brand name. "It's the seal of good housekeeping."

As opposed to the previous administrations, that's an imprimatur Schleiff will try to alter--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 is okay--as long as we keep the values of the network. Two steps forward and one step back are still good."

Ironically, Hallmark's strength is also its problem. Its key demographic is women ages 25-54. "It has increasingly becoming the most important demo," says Schleiff. The problem is, this is the most prevalent of all TV viewer groups. Many cable and broadcast networks are targeting programming to this older female demo.

Overall, Hallmark Channel is "one of the most undermarketed opportunities out there," says Schleiff--which is why, in part, 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. Now, 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."