Crown Media to pay Hallmark $3.3 mil

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NEW YORK -- Crown Media Holdings Inc. said Friday that it promised to reimburse its parent company, Hallmark Cards Inc., $33.1 million for tax benefits that the IRS has disallowed.

Crown Media said in a regulatory filing with the Securities and Exchange Commission it will issue a promissory note in the amount of $33.1 million. The note, plus interest, is due two years after it is issued.

Studio City, Calif.-based Crown Media, which operates the Hallmark Channel and Hallmark Movie Channel, said it joined Hallmark's consolidated federal tax group in 2003. Hallmark had passed on to Crown tax savings it realized as a result of including Crown Media in its tax filings.

The IRS, meanwhile, disallowed certain tax benefits claimed by Hallmark in 2003 and 2004 stemming from losses incurred by Crown.

Shares of Crown rose 10 cents to $7.33 in afternoon trading Friday.
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