Hallmark's profitability greetings
Parent Crown hails ad sales, sub growth
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Still reeling from a painful round of cost-cutting, Crown enjoyed a momentary salve of investor confidence Tuesday: Its share price jumped nearly 15% on news of healthy subscriber and ad sales growth from its family entertainment channels, and a favorable valuation comparable in the form of NBC's $1.25 billion offer for fellow cable net Bravo.
In reporting net revenue for the third quarter, up 52% year-on-year to $40.1 million, Crown Media Holdings touted major improvements in viewership during 2002, particularly among women 25 to 54, where ratings were up 50% compared with the same period last year.
The company turned in a net loss of $43.5 million (42¢ per share compared with Wall Street's expected 50¢ per share loss) for the third quarter, down from a loss of $83 million in the year-ago period.
Cutting back
The company announced a major restructuring Oct. 7 that included a 30% workforce reduction. Execs said the company is now on track to reach operating breakeven by the middle of next year, though it is sacrificing overseas sub growth in its international channels.
"We've now got a very tight company, with around 325 staff total," said Crown Media CEO David Evans, who noted Hallmark Channel ratings were up in all major U.S. demographics in October vs. the same time last year.
Claiming to be the fastest-growing cable network in the U.S. in terms of subscriber growth, Hallmark said subscriptions increased 20% for the quarter to 46.5 million. The company expects to finish the year with 100 million worldwide, and anticipates adding 5 million-10 million U.S. subs in 2003.
Softening of its international markets was offset by 103% ad sales growth over the same quarter last year to $18.2 million.
Seasonal gathering
Evans predicted a strong holiday schedule that features six original events -- five premiere movies plus a Tony Bennett special. Several other major program acquisitions will be announced in the near future.
Crown downplayed rumors it was scouting for a buyer in the U.S., saying shareholder Hallmark Cards was committed to the channel long term.
Still, execs were pleased by the comparable value placed on it by Monday's $1.25 billion offer for Bravo, which generates roughly $60 million in ad revenue off 68 million subs.
"There are always rumors flying around about a possible partnership, but there's nothing on the horizon at the moment," Evans said.
