Ratings Sink Hallmark Channel Ad Revenue

A steady decline in ratings has led to another tough quarter for Hallmark Channel, which saw second quarter ad sales revenue fall 4 percent versus the prior-year period.The network took in $49.7 million in second quarter ad sales, down from $51.8 million a year ago. Per parent company Crown Media’s 10-Q filing with the Securities and Exchange Commission, the decrease in ad dollars was directly related to Hallmark Channel’s slumping deliveries.Per Nielsen ratings data, Hallmark Channel’s average prime time deliveries plummeted 23 percent in Q2, with an average nightly draw of 730,000 viewers. Hallmark closed out the quarter ranked 27th among ad-supported cable networks, down from 22nd place in the year-ago period. Two years ago, Hallmark was ranked No. 13, averaging 1.21 million viewers in prime.The channel also weakened among its target demos. Hallmark averaged 183,000 adults 25-54 in prime, down 27 percent from 250,000 in Q2 2009. Women 25-54 dropped 25 percent to 136,000.Last year, the median age of the typical Hallmark Channel viewer was 59.5, down from 64 in Q2 2007.Affiliate fee revenue, which generally accounts for about 25 percent of the network’s overall take, was practically flat versus the prior-year period. The network in Q2 amassed $15.9 million in subscribers fees, up 0.1 percent. Hallmark Channel now reaches 89.8 million U.S. subscribers. Spinoff property Hallmark Movie Channel is now available in 35.8 million homes.According to Crown Media’s SEC filing, Hallmark Channel sold 44 percent of its inventory in the 2010-11 upfront, a slight improvement from the 40 percent it moved in the previous year’s bazaar. The 2010-11 inventory was sold at CPMs 20 percent higher than that which was sold in the previous upfront, an increase that reflects the significant rate increases Hallmark was able to command with its upcoming Martha Stewart-powered lifestyle programming block. “This is an ideal partnership in terms of brand, audience and content, and we are looking forward to seeing our vision become a reality on September 13th,” said Crown Media president and CEO Bill Abbott. ”Early indications from advertisers and distributors confirm our expectations of the combined value and appeal of our new daytime format.” Scatter-to-scatter rates were up 22 percent in Q2.While Hallmark continued to see softness in its core demos, the network was able to clamp down on cancellations. Advertisers backed out on just 3 percent of the Q2 inventory commitments, a marked improvement from the 21 percent cancellation rate in the second quarter of 2009.At the close of this earnings period, Crown Media is the only network group that endured a drop in ad sales dollars. Walt Disney Co.’s ESPN enjoyed a 31 percent lift in FY Q3 ad sales revenue (17 percent when dollars were adjusted to reflect the sports net’s World Cup haul and its two additional NBA Playoff broadcasts); while Comcast’s suite of networks boosted Q2 sales by 21 percent. Sales at Scripps Networks Interactive soared 27 percent (13 percent if recent addition Travel Channel is factored out), while Rainbow Media grew ad sales 18 percent.Turner lifted Q2 ad sales revenue 14 percent, Discovery Communications notched a 13 percent gain and the News Corp. family of networks was up 11 percent. Viacom demonstrated the smallest gains on a percentile basis, improving ad sales revenue by 4 percent in the second quarter.

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Ratings Sink Hallmark Channel Ad Revenue

Anthony Crupi

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