Crown Media Reports Higher 2Q Earnings

Ad revenues climb 15%

By Jon Lafayette -- Broadcasting & Cable, 7/27/2012 9:00:19 AM

Updated 1:08 p.m. ET

Crown Media, which runs the Hallmark Channels, reported higher second-quarter earnings as both ad revenue and subscriber fees increased.

Net income rose 12% to $13.5 million, or 4 cents a share, from $12.1 million, or 3 cents a share, a year ago.

Revenues rose 14% to $86.7 million in the quarter.

"For second quarter, Crown Media continued to experience impressive revenue and earnings growth," Bill Abbott, president and CEO, said in a statement.

Ad revenues were up 15% to $66.5 million.The company attributed the gains to audience growth, increased distribution and higher ad prices. Ad revenue at Hallmark Movie Channel increased 40% to $11.5 million in the quarter from a year ago.

During the company's conference call with analysts, Abbott said that Hallmark Channel was getting prices 36% above upfront levels and that Hallmark Movie Channel was getting 34% price increases.

But Abbott said Crown was concerned about a slowdown in the scatter market in the third quarter. "There no question that the third quarter is softer than we would like," he said. 

Despite the slowdown, Crown CFO Andrew Rooke said that with encouraging upfront results and new daytime programming in the works, "we certainly anticipate achieving that [previously given as guidance] mid- to high-single digit revenue growth for the full year and indeed would expect improvements in our operating margins."

Abbott said that during the upfront, the Hallmark Channels registered price increases at the mid-single digit level and saw volume increase by double digits.

Crown said the Hallmark Channel's new daytime programming, including the daily show Home and Family, was drawing CPMs that were 80% to 100% above its off-network daytime fare. Home and Family and Marie, another daytime series, attracted first-time advertisers including KitchenAid, Electrolux, Visa and General Motors to the channel.

Subscriber fee revenues increased 10% to $19.9 million. The company said that it completed a carriage renewal with Charter and an agreement with a carrier representing 15% of Hallmark Channels households expires at the end of the year. "We don't anticipate any problems," general counsel Charles Stanford said.

Programming expenses fell 5% to $34.5 million as a number of program license agreement expired.