Crown Says Programming, Marketing Costs Down

Q3 earnings lower because of special gains a year ago

By Jon Lafayette -- Broadcasting & Cable, 11/1/2012 9:47:09 AM

Crown Media Holdings, which owns the Hallmark channels, said its earnings dropped in the third quarter and that its programming and marketing expenses were lower.

Net income was $11.5 million, or 3 cents a share, down from $163 million, or 45 cents a share, a year ago. The company had a gain from the sale of a discontinued operation a year ago. Adjusted earnings before interest, taxes and depreciation were up 32% to $31.3 million.

Revenue rose 4% to $147.6 million in the quarter. Subscriber fee revenue was up 7% to $19.3 million because of contractual rate increases. Advertising revenue was up 3% to $188 million.

"Crown Media saw a positive third quarter with solid increases in EBITDA and advertising revenue," Bill Abbott, president and CEO of Crown Media Family Networks, said in a statement. "During the third quarter, our family-friendly programming continued to be of high value to advertisers and viewers despite strong competition from the Summer Olympics."

Abbott added: "We are confident in our ability to capitalize on the strength of our brand during the upcoming holiday season and look forward to our holiday programming schedule, and to achieving our fourth quarter revenue goals."

Crown Media said that programming expenses dropped 8% in the quarter to $29.7 million as several program license agreements expired. Marketing expenses dove to $400,000 in the quarter from $2.6 million in the third quarter of 2011. Marketing expenses will increase in the fourth quarter to support holiday programming, the company said.

The company said that its upfront sales resulted in double-digit increases in volume from a year ago. Prices were up by mid-single digits, and first-time advertisers are paying rates 22% higher than the average of sponsors already doing business with the channel.

In the scatter market, prices were up 53% from the 2011-12 upfront on Hallmark Channel and up 51% on Hallmark Movie Channel.