Hallmark Channel will have to navigate the tricky waters of finding success as a "family-friendly" network without Margaret Loesch.
Last week, Loesch said she would exit her post as founding president and CEO of Crown Media U.S. LLC, which operates Hallmark Channel when her contract expires later this month.
Succeeding Loesch is Lana Corbi, currently chief operating officer of parent Crown Media Holdings Inc. and a veteran of Fox Broadcasting Co.
Corbi — who once handled network distribution for Fox — takes the helm as Hallmark Channel embarks on some expansion plans, including interactive initiatives and the possible launch of digital spinoffs from the core network.
"They would be channels compatible with our brand, compatible with our audience," Corbi said, declining to specify the concepts that Hallmark is considering. "They really range from A to Z. We're looking at a number of possibilities."
Loesch shepherded the initial 1999 relaunch of what was then called Odyssey Network, a religious faith-and-values programming service, into a general-entertainment network. The network was rebranded as Hallmark Channel effective Aug. 5., in hopes of taking advantage of the name of one of its part owners.
Loesch was president of Jim Henson Television when The Jim Henson Co. and Hallmark Entertainment partnered to acquire a stake in the National Interfaith Cable Coalition's religious-oriented Odyssey.
A former Fox Kids Network president, Loesch said her decision to leave Hallmark Channel was made mutually with David Evans, CEO of parent Crown Media Holdings Inc. Loesch said she and Evans first discussed the possibility of her departure back in May.
She finalized her decision to resign a few days after the Sept. 11 terrorist attack on the World Trade Center, which she witnessed from Hallmark Channel's offices on 45th Street and Sixth Avenue in New York. That event also contributed to her decision to take a break and spend time with her family.
'GRUELING YEARS'
Referring to her tenure at Hallmark Channel, Loesch said, "It's been a grueling three years for me, when you look at my lifestyle and my sacrifices and time not spent with my son."
But sources familiar with the situation also said Evans had been dissatisfied with Odyssey/Hallmark's programming strategy this past year and had been talking to possible replacements for Loesch this summer.
One source said Evans felt that Loesch — who is popular and well-respected in the television industry — was better suited to creating programming rather than overseeing an entire network.
A Crown spokesman declined to comment.
There was also a belief that Crown didn't think Loesch fully embraced the global nature of the Hallmark Channel brand and was viewing it too narrowly, a source said. Crown also declined to comment on that.
Loesch said last week that she has "wanted to get closer to the creative process" in whatever new endeavor she chooses.
NET GAINS
Hallmark Channel made some significant strides under Loesch's watch. The network substantially increased its distribution, now at roughly 40 million subscribers, by closing carriage deals with DirecTV Inc., Time Warner Cable, AT&T Broadband, Adelphia Communications Corp. and Charter Communications Inc.
Hallmark Channel also enjoyed a strong upfront this year, even as other cable networks suffered, according to Loesch.
"We're in very good shape," she said. "It's been a very tough road."
The network's meager ratings have seen large gains, but are still relatively small. In the second quarter in primetime, then-Odyssey posted a 0.4rating, up 33 percent from a year ago, according to Nielsen Media Research.
While the network's ratings are up, Hallmark Channel has found it tougher to craft a distinct identity. Both Loesch and Corbi said the channel's mission is to be an adult-targeted, general-entertainment channel that is also family-friendly.
The recent name change should continue to be a boost, since consumers had often mistakenly thought Odyssey was a travel channel.
But Odyssey/Hallmark Channel's programming has been a mixed bag that seems not to reflect a very cohesive strategy. Hallmark Channel has access to the Hallmark Entertainment programming library, while its originals have included diverse fare ranging from miniseries based on literary classics such as Lord Jim
and Mark Twain's Roughing It,
to Sherlock Holmes made-for-TV movies, to acquired shows such as Northern Exposure
and The Honeymooners.
NO BREAKOUTS YET
Hallmark Channel has yet to create any breakout original series. Instead, it's opted to focus on event programming, a strategy one rival programmer called a mistake. As Home Box Office has learned, series can bring viewers back to a network on a regular, weekly basis.
Currently, about 8 percent of Hallmark Channel's weekly programs are original, according to a Crown spokesman. The goal is to offer 30 to 40 percent original programming, with the rest acquired or culled from the Hallmark library.
Corbi said during the next few weeks she will decide what Hallmark Channel's programming tack should be, be it movies or series.
"We want to be the dominant family-friendly channel in the country," Corbi said.
Networks have found family programming to be a challenge. Fox Family Channel, which is being purchased by The Walt Disney Co., has struggled to succeed in the genre. It could gain strength after Disney turns it into ABC Family and starts airing repurposed ABC programming on the cable channel.
Pax TV faces the same problem Hallmark Channel has: viewers of so-called "family" shows are often older, a demographic that advertisers don't want, according to Guy McCarter, director of entertainment for ad agency OMD USA.
"What Hallmark Channel is doing is similar in some ways to what Pax TV has been doing," McCarter said. "Part of the question is, 'What kind of brand equity will the name Hallmark bring to the channel?' It will probably be positive and help them. But what are they going to build around that? It's going to be difficult."
And Pax TV benefits from receiving fairly fresh repurposed programming from NBC, which owns a stake in the network, McCarter said.
Hallmark Channel is also essentially a stand-alone service with no backing from a domestic media conglomerate. Crown has no other U.S. cable networks to bundle Hallmark Channel with, and it doesn't have retransmission consent to use as a bargaining chip. Hallmark Channel has been paying upfront launch fees to lock up distribution deals.
The name change has helped, according to Frank Hughes, senior vice president of programming for the National Cable Television Cooperative. His small cable-operator members have been launching Hallmark Channel much more this year than last.
"We're four or five times what we did last year," Hughes said. "It's struck a chord with our members."
