NEW YORK — Hallmark Entertainment is making its entry into domestic cable programming, joining with Jim Henson Prods. to invest a total of $100 million for a significant stake in the Tele-Communications Inc.-controlled Odyssey Channel, sources close to the deal said Friday.
The investment, expected to be announced within days, presages a dramatic overhaul of the 30 million-subscriber channel, with a new management team to be brought in, as well as new programming supplied by Hallmark and Henson.
Odyssey, currently 49% owned by TCI’s programming arm Liberty Media and 51% by religious group National Interfaith Cable Coalition, runs a mix of religious and family values programming.
By bringing in Hallmark and Henson, Liberty gets a cash infusion for the money-losing network and also gains access to both companies’ renowned programming libraries.
Hallmark originally intended to launch its own branded domestic cable network — as it has done overseas — but Liberty is said to have dissuaded Hallmark from trying that from scratch because of the difficulty in getting distribution for new channels.
Instead, the Odyssey Channel will be Hallmark’s domestic programming play. Hallmark and Henson already have interests in several international networks.
After the Hallmark-Henson investment, which will be made mostly in cash but partly with programming commitments for Hallmark hit TV movies “Merlin” and “Moby Dick,” the religious group and Hallmark-Henson will have an equal shareholding. Liberty will have a slightly bigger stake, although the three groups will share control of the board. Precise details of ownership percentages were not known Friday.
Odyssey’s current management team, put in place by the religious group, has agreed to cede control to a chief executive that would be hired with the approval of Hallmark and Henson. Odyssey doesn’t have a CEO at the moment as the previous top exec, Gary Hill, died last year.
“(Hallmark) won’t get control, but they’ll have a significant say in the channel,” said a source, explaining Hallmark’s enthusiasm for the deal. “They’re getting into a channel with 30 million subscribers, they get a platform for their programming and they share in the upside.”
Hallmark has agreed to keep Odyssey’s programming mission largely intact, albeit with some changes. The network features religious and inspirational programming mixed with off-network series and movies that lean toward the wholesome, such as “Brooklyn Bridge” and “Trapper John, M.D.” as well as the claymation kids inspirational show “Davey & Goliath.”
Liberty wants to be careful not to change Odyssey’s programming format to ensure that its cable affiliates continue to carry the network. Cable network carriage agreements are specific about the programming content of the channel, and if the format varies from what’s stated in the contract, cable operators are free to drop the service.
“This is not going to become the Family Channel,” said a source close to the deal, who likened Odyssey to the soon-to-be launched Pax Net. “It’s going to be a channel with value-based programming, but done in an entertaining fashion.”
Odyssey will keep a certain amount of religious programming. The National Interfaith Cable Coalition represents 65 different religious faiths. Regular shows on the channel include “The Teaching of Christ,” “The Daily Mass” and “A Biblical Portrait of Marriage.”
The source added that the deal came together smoothly because both Hallmark and Henson have similar company mission statements to Odyssey’s.
“They want to inform and entertain, but they also want to enrich the lives of viewers,” said the source, referring to Hallmark and Henson.
To date, Liberty has propped up Odyssey financially. Sources said that Liberty execs believe the channel’s programming has improved since it overhauled the service several years ago, and changed its name to Odyssey from the Faith & Values Channel.
However, the network has extremely poor viewership and, as a result, has been unable to attract significant ad revenue. Odyssey will generate $15.3 million in ad sales and $5.6 million in affiliate fees in 1998, according to Paul Kagan Associates.
The channel produces original programs under the Odyssey Prods. umbrella. Sources said that Liberty execs praised “CeCe’s Place,” a variety show hosted by gospel singer CeCe Winans, and “Landmarks of Faith,” which premieres July 1.
“These are pretty high-quality shows, but there are no eyeballs,” said a source.
Odyssey’s partners are banking on Hallmark’s award-winning “Hall of Fame” movies and Henson’s well-regarded kids pro-gramming to lure viewers to the channel.
Liberty’s parent Tele-Communications Inc. created the channel — originally called Vision/ACTS — in 1988 so that cable systems in religious areas could launch one channel that represented all different faiths instead of filling up their limited channel lineups with a half-dozen religious channels each representing one faith.