Hallmark Channel Improves Ad Sales Take

After enduring four consecutive quarters of declining ad sales revenue, Hallmark Channel turned things around in the final three months of 2009, as improved pricing helped the network lift its sponsor haul by 1 percent.

Hallmark Channel amassed $60.8 million in fourth-quarter ad sales revenue, up a tick from the $60.4 million it took in during the year-ago period. Per parent company Crown Media’s 8-K filing with the Securities and Exchange Commission, the increase in ad dollars was “due to increased pricing.”

Sequentially, ad sales were up 31 percent vs. the $46.3 million Hallmark notched in the third quarter of 2009.

Affiliate fee revenue increased 14 percent to $16.4 million, up from $14.5 million in the fourth quarter of 2008. Hallmark Channel now reaches 88.3 million U.S. subscribers.

In a separate filing with the SEC, Crown Media revealed that Hallmark sold 41 percent of its inventory in the 2009-10 upfront, down from the 50 percent it generally moves during the summer bazaar. As was the case with most cable networks, the discrepancy was chalked up to unfavorable pricing.

“This inventory was sold at CPMs approximately 1.6 percent lower than the inventory sold in the 2008-09 upfront,” read a passage in Crown’s 10-K. “We held more advertising inventory from the 2009/2010 upfront for use in the general scatter market because of lower CPMs offered by some advertisers.”

Hallmark Channel saw Q4 scatter pricing coming in at around 60 percent over the compromised upfront levels, and on a year-over-year basis Q4 scatter was slightly above the network’s rates during the final three months of 2008.

Advertisers pulled out of 13 percent of Hallmark’s upfront commitments. Total 2009 ad sales revenue fell 4 percent to $214.5 million.

Crown noted that along with general economic conditions, Hallmark Channel’s performance was hampered somewhat by declining ratings. In Q4, the network’s prime-time deliveries fell 23 percent to 1.17 million viewers, while adults 25-54 were down 12 percent to 337,000.

“In order to reverse the recent decline in ratings, we plan to continue or increase the number of our original productions and develop a programming schedule that attracts a greater number of viewers in our target demographic, all while controlling the expenses relating to these actions,” Crown noted. “Our recent acquisition of the broadcast rights of Martha Stewart Living and our planned 26 original productions for broadcast in 2010 are key parts of these plans.”
In addition to the flagship channel, Crown also operates Hallmark Movie Channel, which was the fastest-growing cable network in 2009. HMC added 15.7 million subs last year, bringing its overall distribution to 29.1 million households. Nielsen will begin rating HMC in the second quarter of 2010.

Shares of Crown Media were up 2.99 percent to $1.72, in early-afternoon trading.

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