Crown Media Holdings Will Not Sell Hallmark Channel

Decision Comes After Eight Months With No Offers

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This story has been corrected since it was first posted. Salaries listed in the last paragraph for Hallmark executives, Chris Moseley and David Kenin, cited only their salary and bonus, while a third, ad sales chief Bill Abbott's, included his total compensation of salary, bonus and restricted stock options.

NEW YORK ( -- After eight months exploring a possible sale, Crown Media Holdings -- parent company of the Hallmark Channel -- has taken the cable network off the block.
Even though Crown Media has grown its revenue and subscribers, it continues to lose money.
Even though Crown Media has grown its revenue and subscribers, it continues to lose money.

"Ultimately the board determined that the greatest value for our shareholders will be derived by our continued operation of our business," said CEO David Evans in a statement.

Investors disagree
Investors, however, appeared to disagree with Mr. Evans and Crown Media's stock went down 13% on the news. Crown Media is a publicly traded company, separate from but majority owned by the privately held Hallmark Cards. Crown Media has grown its revenue and subscribers, but it continues to lose money. For the fourth quarter that ended Dec. 31, revenues were up 39% to $60.5 million, while the loss narrowed to $59.8 million, or 57 cents a share, compared with a loss of $129 million, or $1.23 a share, for the same period a year earlier. Last year Crown Media sold its international division.

In a statement, Hallmark CEO Don Hall Jr. said: "Our relationship with Crown Media has been mutually beneficial. Crown Media has been able to leverage the consumer recognition and strength of the Hallmark brand and together we have collaborated on successful co-marketing programs between Hallmark Channel and the more than 4,000 Hallmark Gold Crown stores."

In a recent earnings call, Crown Media's Mr. Evans called Hallmark Channel's underlying business "strong" and noted it achieved record advertising revenues in 2005.

A current example of such co-marketing between the cable network and Hallmark Cards includes a Mother's Day campaign that ties together the Hallmark Channel, KFC (one of the channel's advertisers), and Hallmark Cards' flower business. The promotion intends to drive consumers to KFC restaurants where a purchase of any KFC bucket includes a 20% discount coupon for a purchase at Hallmark Flowers & Gifts.

Marketing chief leaving
Hallmark Channel also announced yesterday that Chris Moseley, its exec VP-chief marketing officer, will leave the company at the end of the month. Ms. Moseley, who had been with the channel since 2000, helped lead the effort to create marketing synergies between the cable network and Hallmark Cards' 4,200 retail stores -- the second largest retail network after RadioShack, executives say.

"I have accomplished the objectives we set out when I joined Crown Media and I am leaving behind a group of executives who have the talent and the experience to meet the challenges ahead," she said in a statement.

The company gave no specific reason for Ms. Moseley's departure but a Wall Street Journal article from last summer suggested the high price of Crown's executive salaries. According to company filings with the SEC, 2005 salary and bonus for Ms. Moseley totaled $857,660 and $1.3 million with restricted stock options; David Kenin, exec VP-programming, made 892,892 in salary and bonus and $1.39 million with restricted stock options; and Bill Abbott, exec VP-ad sales, made $743,600 in salary and bonus and $1.33 with restricted stock options.
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