Crown Media Holding, which runs the Hallmark Channel, reported a solid profit in the fourth quarter after barely breaking even a year ago.
Net income was $29.5 million, or five cents a share, up from 373,000, or less than a penny a share, a year ago. Revenues rose 17% to $90.7 million in the quarter.
"Our solid quarter of results, with strong holiday seasons on Hallmark Channel and Hallmark Movie Channel, and continued development of the Hallmark Channel Home programming block, fueled advertising revenue gains and increased subscriber license fees," Bill Abbott, President and CEO of Crown Media said in a statement. "These revenue gains and careful cost management have enabled us to realize our bottom-line financial objectives for both the quarter and the year."
Advertising revenue increased 13% to $68.5 million in the quarter. Crown said the gains were attributable to the popularity of its holiday programming, growth of its lifestyle programming block featuring programming from Martha Stewart Living Omnimedia, and the having Hallmark Movie Channel's audience measured by Nielsen.
During the fourth quarter ad prices in the scatter market were up 55% from upfront pricing, and up 8% from a year ago, interim CFO Mike Harmon said during the company's earnings call with analysts Thursday.
Abbott said that ratings for the shows in new lifestyle block were down 10% year-over-year. "The process has been slower than we would have liked," Abbott said. But the viewers the block is attracting are more upscale and from bigger markets, increasing how desirable they are to advertisers.
Subscriber revenues rose 34% to $22 million the quarter thanks to more favorable deals negotiated with distributors.
Crown is in the middle of a distribution dispute with AT&T, so that carrier's 2.5 million subscribers are not receiving the networks. "It's difficult to say when there might be a resolution," Abbott said. Crowns' agreement Cox is also expired, but Hallmark Channel and Hallmark Movie Channel are still being carried under the terms of the old agreement. Crown's agreement with Cablevision Systems expires in September.
