Like Oxygen, Hallmark Channel Looks To Gain Some Financial Breathing Room

Keeping its mysterious TV cable programming/financial ways intact, a top-rated cable network continues not getting its due -- nor the highest price -- from cable operators.

Now, after decades of head-scratching cable programming deals, Hallmark Channel wants federal regulators to have a look. Hallmark, somewhat surprisingly a top five rated network among all cable networks in prime time, says it only garners some 3 cents a subscriber from cable operators.

That is too low compared to other networks like CNN, Court TV, Golf Channel and E! Entertainment Television, all of which pull in much better affiliate fees, but don't bring home as many viewers as Hallmark. Hallmark's prime-time slate is mostly family-oriented programming.

Henry Schleiff, president and CEO of Hallmark parent Crown Media Holdings, thinks the Federal Communications Commission might like to do something about this -- perhaps add some new regulations to the already federally mangled rule world of cable TV.

The problem is this: Hallmark is an independent network, and as such can't command better deals than other multi-network, bigger media companies, can get. The Oxygen cable network was in Hallmark's league -- the league of independent cable networks. But yesterday Oxygen breathed a little easier with the announcement of its purchase by NBC.

In the best of all possible worlds, Hallmark would love to have the same fate -- to be sold to the likes of a CBS, a network which, like Hallmark, still has lot of older viewers. CBS would like to grow its cable holdings. Is Hallmark the right fit? CBS executives might say they'd rather get some slightly younger viewers.

With the coming of new cable affiliate negotiations, Schleiff realizes new deals with substantially higher increases will be hard to come by. Thus, the visit to the FCC.

Does the higher-rated show deserve the higher price? That's the rule when it comes to advertisers, generally speaking. But the cable industry has a different set of criteria, which come from its longtime established roots as a local cable programming monopoly.

Sure there may be satellite and broadband now, but old habits are tough to break. Pricing leverage among cable network operators has everything to do with the number of cable channels -- as well as more valuable broadcast stations -- you have. It's not necessarily whether they are any good.

There is nothing wrong with big media companies. But capitalism only seems to live on one end of the cable business.

Hallmark should do more work to convince the FCC.

If, in fact, Hallmark has been convincing low-ball packaged good advertisers to spend more money on the network -- those sponsors typically are attracted to programs skewing toward older viewers -- this might be helpful in convincing the FCC that the other side of the cable financial equation, that of affiliate fees, should also work at more market-like appropriate rates.

And if not, the FCC should fine cable operators. It could rule that a family of networks should not be the only ones with an advantage, that a family programming network should have a shot



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