Crown Media eyes sounder footing
Hallmark Channel parent recapitalization to cut debtNEW YORK -- Management of Hallmark Channel parent Crown Media vowed Thursday that a planned recapitalization will put it on a sounder financial footing.
The company is facing significant debt challenges that raise "substantial doubt" about its ability to continue operations without filing for bankruptcy, according to the company's accounting firm.
Crown Media plans to address the situation by completing a recapitalization under agreements with Hallmark Cards that it unveiled Monday.
Crown Media said in its fourth-quarter earnings report Thursday that its accounting firm raised doubt about the cable network company's "ability to continue as a going concern" in its financial statements for 2009.
The "going concern" language is a standard line that accounting firms use to warn of debt troubles that could force a company into bankruptcy.
Crown Media said it has upcoming debt obligations that present a challenge. "Management's plan is to convert these short-term obligations into new debt and convertible preferred stock" by completing the planned recapitalization.
Crown Media reported a fourth-quarter profit of $373,000, down from $1.3 million in the year-ago period. Revenue rose 3% to $77.6 million, but the cost for terminating two agreements cut into the bottom line.
"Although we continue to be impacted by the economic challenges facing our industry, we finished the year with a strong fourth quarter of ratings success for the holiday season," said president and CEO Bill Abbott.
On the call, the CEO addressed the state of the economy and advertising market. "We are beginning to see signs of a slow recovery," he said.