The disclosure in an unusually dense SEC filing led to a 19.2% pop today in the share price for the parent of the Hallmark Channel, taking it to a two-year high. The greeting card company already controls 90.3% of Crown Media. It says in the filing that a standstill agreement will expire at the end of 2013. As a result, Hallmark and its subsidiaries are “evaluating their investment.” Options include buying additional shares, merging, and leading a stock repurchase program. Meanwhile, Hallmark says it “may at any time reconsider and change [its] plans or proposals.” Crown’s stock price had been rising before the announcement: It’s +45.9% over the last 12 months. Even so, the company would be relatively cheap for Hallmark to buy. Crown had a market value of $892M based on today’s closing price.
The owner of the Hallmark Channel says that its original movies are still working — and advertisers like the network’s daytime programming plans which include a two-hour daily show Home And Family and Marie Osmond’s Marie. Crown generated net income of $13.5M, – 38% vs the period last year, on revenues of $86.7M, +13.9%. Much of the decline in earnings is due to interest and tax expenses, partly due to its debt restructuring. For common stockholders, earnings per share increased a penny to four cents. The company is thinly traded and not closely followed by analysts. Crown says that ad sales were up 15% in Q2 to $66.5M, which it attributes to the growth in its audience. Subscriber fees from pay TV providers were up 10% to $19.9M. Crown says that that advertiser CPMs for Home And Family — which will feature former Entertainment Tonight host Mark Steines and TV personality Paige Davis — were as much as 100% better than what Hallmark had been collecting for its off-network daytime shows. It also says that Marie is attracting first-time advertisers including KitchenAir, Electrolux, Visa, and General Motors. “During second quarter, the casting developments for Hallmark Channel were significant,” says Crown Media Family Networks CEO Bill Abbott. Although Crown shares closed yesterday at a modest $1.73, the price is up nearly 43% in 2012, recovering somewhat from a steep decline in 2011.
The trading day ended with a thud. The benchmark Standard & Poor’s 500 wound up -2.1% as word spread that Germany might balk at a proposal to help bail out debt-laden members of the European Union including Greece and Portugal. That affected media stocks; the Dow Jones U.S. Media Index fell 3%. Disney was the hardest hit among the Big Guns, with shares off 3.2%. It was followed by News Corp (-3.1%), CBS (-3%), Comcast (-2.9%), Time Warner (-2.7%), Viacom (-2.3%), and Sony (-2.1%). Newspaper companies were big losers led by McClatchy (-10%), New York Times (-7.3%), E.W. Scripps (-6.5%), and Gannett (-6.3%). But others weren’t far behind: Cablevision (-6.1%) hit a 52-week low. The losers list also included Crown Media (-6.6%), AOL (-5.9%), DirecTV (-4.7%), Live Nation (-4.4%), Barnes & Noble (-4.3%), TiVo (-4.2%), Sirius XM (-4.2%) and Dish Network (-4.2%). Today’s few gainers were led by Coinstar, up 7.8% on a report that its Redbox unit will team up with Verizon to offer an online video service. Martha Stewart Living Omnimedia was up 1.7% the day after J.C. Penney said it bought 16.6% of the company. And Madison Square Garden was up 1.7%, hitting a 52-week high, after Morgan Stanley’s Benjamin Swinburne changed his recommendation to “overweight” from “underweight” following the resolution of the NBA lockout.
Shoppers spent a record $52.4B over the four-day Thanksgiving weekend, up 16% from last year, the National Retail Federation says. Add that to reports that European leaders are getting serious about resolving their debt crisis, and it’s easy to see why investors are in such a good mood today. The Dow Jones U.S. Media Index is up 2.8% at mid-day, about the same as the Dow Jones Industrial Average. Among Big Media stocks, Time Warner (+4%) leads followed by Sony (+4%), Viacom (+3.7%), Comcast (+3.7%), CBS (+3.4%), News Corp (+3.2%), and Disney (+2%). In the rest of the media universe several companies that have been pummeled in 2011 are taking a breather including Crown Media (+17.7%), Real D (+11.8%), and Netflix (+10.5%). Sinclair Broadcast Group is up 9% after it announced today that it wants to raise its borrowing capacity by $530M, possibly to buy TV stations. Madison Square Garden — which owns the New York Knicks — is up 8.7% after the NBA announced that it will salvage at least part of this year’s basketball season. The short list of companies that are down at midday includes New Frontier Media (-2.8%), Cinedigm (-2.7%) and Westwood One (-1.1%).
The federal government will have to slash $1.2T in spending, mostly beginning in 2013, if the 12-member congressional Super Committee can’t strike a deficit reduction deal soon. They still appear split — even though, as a practical matter, they have to reach an agreement by midnight in order to have something ready for the official Wednesday deadline. That drove most company shares down, with a late uptick possibly softening the blow. The Dow’s U.S. Media Index was down 1.2% about 20 minutes before the end of the trading day. Disney was hardest hit among the industry’s biggest players: Its shares were -3.5%, followed by Sony (-3.4%), CBS (-2.3%), Viacom(-2%), and Time Warner (-1%). Comcast was up about 0.5%. Among other media companies, Cinedigm (-8.8%) and RealD (-7.2%) took the worst beatings. Others down at least 4% include E.W. Scripps, Entercom, Crown Media, Netflix, National CineMedia, Live Nation, LIN TV, and Dish Network. Gainers include Westwood One, Barnes & Noble, Sirius XM, Radio One, McClatchy, and McGraw Hill.
The owner of The Hallmark Channel had a happy story of its own to tell in 3Q as ad sales improved, marketing expenses dropped — and it recorded a big gain from a deferred tax asset. With that $191.7M one-time tax jolt, Crown had net income of $203.3M, up from $5.9M this quarter last year, on revenues of $74M, up 18%. The company says that ad revenue was up 15% to $56M as it raised average per-viewer prices, while payments from pay TV distributors were up 29% to $18M. The Hallmark Movie Channel contributed $7.8M in ad sales, up 69.6%. Crown says it also benefited from improved ratings from shows in the Hallmark Channel’s daytime block, which includes The Martha Stewart Show, Martha Bakes, and Mad Hungry With Lucinda Scala Quinn. Crown didn’t spend as much on marketing this past quarter as it did a year ago when it launched The Martha Stewart Show. “We have experienced solid growth for our overall advertising sales revenues and are optimistic that the trend will continue,” says CEO Bill Abbott.
The Dow Jones U.S. Media Index was down 3.5% today while the DJ Industrial Average was off 2.4% — and Goldman Sachs may have contributed to the imbalance: It downgraded the entertainment sector today to “neutral” from “attractive” saying that ad sales will be weaker than expected as the overall economy softens. That came as the market also reacted to Greece’s report over the weekend that it will fail to hit its deficit-reduction targets for the year — increasing the possibility of a default. CBS, -7%, was the biggest loser among the major media companies. It was followed by Viacom (-5.1%), Sony (-4.7%), Disney (-3.9%), Time Warner (-3.4%), and Comcast (-2.2%). In the broader media market, broadcasters Westwood One, LIN TV, Rado One, and Entercom were down by more than 10%. Pandora, Live Nation, Crown Media and Cumulus Media lost more than 8% of their market value. A few companies were up for the day including Yahoo (+2.7%), Regal Entertainment (+2.0%), Coinstar (+1.6%) and Time Warner Cable (+0.2%).
Crown Media Family Networks (CMFN), a division of parent company Crown Media Holdings Inc. and home of Hallmark Channel and Hallmark Movie Channel, has named Alexandra Smith and Ayn Prince as directors of programming for Hallmark Channel and Hallmark Movie Channel, respectively. Smith and Prince are both located in Studio City, CA and will report into Darren Melameth, vice president of programming, planning and scheduling.
Crown Media Holdings, the corporate parent of Hallmark Channels, is renaming its cable holdings Crown Media Networks. The new umbrella name includes Hallmark Channel and Hallmark Movie Channel, as well as their HD and online complements. The news was part of Crown Media’s upfront presentation, which featured announcements of 25 Hallmark Channel Original Movies; eight Hallmark Movie Channel Original Premiere movies; a new 13-episode, unscripted lifestyle series The Spirit Table, hosted by Maya Angelou; a Hallmark Channel Original Animated Special, Jingle All the Way, a half-hour animated Christmas special starring Hallmark Cards’ Jingle the Husky Pup.
The impasse in the negotiations between AT&T U-Verse and Crown Media, the parent company of the Hallmark Channel and the Hallmark Movie Channel, over a new carriage agreement resulted in the two channels gong dark for 2.3 million subscribers at 12:01 AM EDT tonight when the two sides’ previous deal expired. Here are the statements by AT&T and Hallmark Channels:
AT&T: We are very disappointed that Hallmark has refused to provide AT&T and its customers with a fair deal one that is no worse than similarly-sized and smaller providers and refused to adhere to key obligations under our current deal. We offered to extend the current deal while talks continued, and Hallmark rejected that offer. We don’t want customers to lose their programming, but we believe strongly that our customers should not have to pay more than their fair share for Hallmark’s channels, which is exactly what Hallmark is demanding.
AT&T U-verse will replace the two Hallmark channels with a free preview of programming from Starz Kids & Family and Turner Classic Movies. According to Crown, negotiations hit a standstill as of Aug. 26.
Hallmark Channels is willing to re-start negotiations toward the distribution agreement as long as they are fair and in good faith. “I was stunned by the apparent disregard for the facts in AT&T’s recent statement regarding our negotiations,” said Bill Abbott, president and CEO of Hallmark Channels. ”However, if they are really serious, my team and I are ready