Hallmark Channel brags it is among the fastest-growing cable channel since
its re-launch a year ago, hitting 47 million subs. But when parent Crown Media
posted earnings, it showed zero growth in cable license fees in the past 12
months. Why? Most of those sign-ups have been deep-discount deals.
"We're not getting subscriber revenue out of most of these deals in the early
years," Crown Chairman David Evans acknowledged.
In the 10-year contracts Hallmark has been signing, fees don't kick in for
four-to-six years, even when the network is paying a launch fee industry execs
say tops out at $7 per sub.
Evans points out that some competing start-ups are signing 10-year deals with
no license fees, leaving them totally dependent on ads.
"That makes it a one-revenue-stream business," Evans points