Hallmark moment

Channel takes down for-sale sign

NEW YORK — After nine months on the block and no serious bidders, the Hallmark Channel is for sale no more.

Parent Crown Media said Monday it has decided, after extensive review, to remove the for-sale sign, cut costs and try to reduce its $1 billion debt.

David Evans, president-CEO of Crown Media, said that high on his agenda is renewing Hallmark Channel’s carriage deals with its four biggest distributors: Comcast, DirecTV, Time Warner Cable and EchoStar. Those deals are due to expire by the end of 2007.

The distribs would have a hard time dropping Hallmark because it’s a top-10-rated network, said Robert Routh, media analyst with Jefferies & Co. “If cable operators failed to renew it, some of their subscribers would shift over to satellite.”

Evans said high ratings and advertiser-friendly content will be two of his selling points in negotiating a monthly license fee of 6¢ per subscriber compared with the average of 4¢ the network gets now.

But he said he’ll also offer cable ops multiple hours of free video-on-demand for a big chunk of the programming that Hallmark owns, plus lots of high-definition movies and TV series.

Hallmark also may offer cable ops and satcasters its 2-year-old spinoff network Hallmark Movie Channel, which reaches only about 500,000 homes, as a freebie, Evans said.

Wall Streeters value Hallmark Channel at about $1.5 billion, including $300 million-$400 million for the extensive Hallmark library of TV movies and miniseries, many produced by Robert Halmi.

Evans said he’ll try to find a buyer for the movie library to help pay down Hallmark’s debt.

Overall, the company was looking for a bigger payday. All the major media players, including Viacom, Walt Disney, News Corp., Time Warner and Comcast, took a look and passed. The low distribution fees may be one reason; the older demos are another.

And while fully subscribed cable nets have tended to be favored assets, the media landscape is changing, and Hallmark may have missed its window.

In 2001, News Corp. sold Fox Family to Disney for a jaw-dropping $3 billion in cash plus the assumption of $2.3 billion in debt.

Evans said the timing was bad for selling Hallmark. Three potential buyers were in turmoil while the network was on the block: Time Warner was trying to fend off a takeover bid by Carl Icahn; Viacom was embroiled in the split of the company into two separate entities; and News Corp. was trying to keep John Malone from buying more of News Corp. by embracing a poison-pill corporate strategy, Evans said.

In February ’05, Crown Media sold the international television division of the Hallmark Channel for $242 million to Providence Equity and several partners.

Crown is controlled by giant Hallmark Cards through subsid Hallmark Entertainment. Liberty Media, JP Morgan Partners and DirecTV also own a stake, as does VISN, a for-profit subsidiary of the National Interfaith Cable Coalition.

Separately, Crown said Chris Moseley, exec VP and chief marketing officer of Hallmark Channels, is leaving at the end of April. She’s been at the company since 2000.

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