Hallmark Sees 4Q Ad Revenue Dip 4.5 Percent

A softening scatter market and a drop in direct-response business have taken a bite out of Hallmark Channel’s margins, as the network saw its fourth-quarter ad sales revenue fall 4.5 percent, to $60.1 million, down from $62.9 percent in the year-ago period.The drop marks a sudden reversal for Hallmark Channel, which otherwise enjoyed a strong 2008. The network closed out the year with a total ad sales haul of $223 million, up 8.4 percent from $205.7 million in 2007. Hallmark’s momentum first began cooling in Q3 ‘08, when the net grew its ad sales dollars by 4.6 percent, to $50 million. In the two preceding quarters, Hallmark saw ad sales expand 15.1 percent, to $56.5 million, a surge that followed a 22.7 percent leap in Q1 ‘08, when it sold $56.3 million in inventory.The dual revenue-stream model helped offset Hallmark’s ad sales woes, as the network took in $14.5 million in affiliate revenue, a whopping 126 percent improvement over its Q4 ‘07 total. For the full year, Hallmark upped its sub fee haul by 106 percent, to $57.2 million, an increase reflecting a string of renewed carriage agreements with the likes of Time Warner Cable, DirecTV and Cablevision.Last year, Hallmark effectively doubled its sub fee, according to an earlier estimate by former Oppenheimer analyst Tom Eagan. While terms were not disclosed, Eagan last February pegged Hallmark’s renewals at between 4 and 8 cents per sub, up from the previous rate of 2 to 3 cents a head.All told, Hallmark parent company Crown Media boosted its Q4 net revenue 8.1 percent to $75.2 million, up from $69.6 million. That total includes Hallmark Cards advertising and unspecified “other revenue.” The company reported total-year revenues of $281.8 million, up 20.2 percent from $234.4.Hallmark ended the year with ad-supported cable’s tenth-largest delivery, averaging 1.34 million viewers in prime, a lift of 7 percent over the previous year. The net also raised its standing among adults 25-54 by 8 percent, averaging 321,000 members of the demo. “Right now, Americans are looking for predictability in very unpredictable times. Hallmark Channel and Hallmark Movie Channel offer the kind of poignant and uplifting programming that Americans want and need,” said Henry Schleiff, president and CEO of Crown Media. “I am confident that our unique appeal and sound operating structure will help us navigate successfully through the uncertain times ahead.”

Convergent TV

Hallmark Sees 4Q Ad Revenue Dip 4.5 Percent

Anthony Crupi

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Anthony Crupi