Hallmark Channel owner's Q2 loss widens

Shareholder dispute makes cameo on call, upfront strong

NEW YORK -- The quarterly earnings conference call of Hallmark Channel owner Crown Media on Thursday briefly got a bit heated amid a showdown between a critical shareholder and management. But in a positive, the company touted strong upfront advertising sales trends and further progress at its movie network.

Shareholder Salvatore Muoio, the firm's largest public shareholder, has sued the company over the terms of a recapitalization deal with Hallmark Cards, and he asked several questions on the call - requesting such things as more specific ad figures. Management didn't respond to most questions, referring him to regulatory filings instead and at one point arguing he has asked the same questions early in the legal process. 

"I really expect really serious answers from you guys going forward," Muoio shot back before the situation calmed down. 

Crown Media on Thursday reported a higher second-quarter loss on lower revenue.
The loss for the quarter of $9 million compared to the $5.3 million loss recorded in the year-ago period. Revenue fell 4% to $65.7 million as advertising revenue decreased 4% due to lower ratings.

But the company touted a strong upfront ad sales haul thanks in part to new programming that is set to launch in mid-September. "Based on the strength of the Martha Stewart brand, the introduction of an original lifestyle programming block (in a deal with Martha Stewart Living Omnimedia) and the strong slate of original holiday movies, Hallmark Channel delivered its best results for the recent upfront ad sales season," Crown Media said.

According to management, ad inventory during the Martha Stewart programming block sold for ad rates 117% above the levels reached for the same time periods last year.

President and CEO Bill Abbott on a conference call also lauded the continued development of Hallmark Movie Channel. It added 21 new advertisers in the upfront ad market, and management said its ad rates were just slightly below those fetched by the Hallmark Channel.