TV viewers happily greeting Hallmark
“Most of our materials, in a very complex and troubled world, are situations that elevate the human spirit and cherish human relationships and celebrate life,” said Kenin, Crown’s executive vice president for programming. It’s natural for executives to tout their programs and ratings to the media. But Hallmark is reaching for a different audience: the cable and satellite carriers it needs to convince that the channel’s popularity should earn it higher license fees. Cable industry realities have kept the channel’s subscriber fees in the cellar despite audience growth. “We’re an independent, so we’re not part of a larger group that says if you pay us more we’ll throw in such-and-such other networks. We have to do it the old-fashioned way, which is to say on the merits,” Schleiff said. “And in this real, cruel world we live in, the merits are not always rewarded commensurately with the real value.” Other channels with comparable ratings but corporate connections can get up to a dollar per subscriber per month, “way above what Hallmark Channel” receives, Schleiff said. (One news report put Hallmark’s license fees at 5 cents per subscriber.) That has forced Hallmark to rely largely on advertising revenue, compared to the “duel revenue” streams of ad sales and carriage fees other channels enjoy, he said. The combination of startup costs from Hallmark Channel’s August 2001 launch and its operating deficit has created a $1 billion debt for Crown, Schleiff said. Crown was formed by Hallmark Cards Inc., which owns 67 percent of the media company. A bid last year to sell the Hallmark Channel was unsuccessful despite its robust number of subscribers – about 75 million – and 2006 ad sales of nearly $200 million. Crown abandoned the effort, at least for now. Schleiff, the former Court Television Network chairman and CEO who was named to his current job last October, has the task of improving Hallmark’s bottom line. He’ll be renegotiating contracts this year with major cable and satellite operators such as Time Warner Cable and DirecTV Inc. He said he intends to “educate” them about Hallmark’s true value. For instance, conventional wisdom has it that younger viewers, supposedly more susceptible to ads, are the gold standard; Schleiff contends that Hallmark’s older-skewing audience shouldn’t be undersold. If carriers want to drive subscribers to other services, such as high-speed Internet access, “our audience of baby boomers represent the bill payers. They should make sure they’re taking great care of the Hallmark Channel viewers,” Schleiff said, laying out his argument. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! For the fourth quarter of 2006, it came in at No. 6. In December weekend prime time, it was the most-watched ad-supported channel. It bested competitors including TBS and USA Network with big seasonal guns, including the original movie “The Christmas Card,” and with the U.S. TV premiere of the hit documentary “March of the Penguins.” In 2005, the channel ranked No. 11 in household ratings. It averaged 930,000 daily viewers in 2005, with the number rising to nearly 1.2 million last year. The ratings indicate “there is an insatiable demand for what is now a very limited supply of family-friendly programming,” said Henry Schleiff, president and chief executive officer of Crown Media Holdings Inc., which owns and operates the channel. While most channels try to be “a little bit hipper, a little bit cooler, a little bit sharper than the other one,” he said, Hallmark is serving audiences in search of “good stories and classic series.” Kenin, who oversees selection of the nearly two-dozen original movies that air annually on Hallmark, said he has a simple rule when reviewing scripts: “If I’m not crying, we don’t do them.” In January 2002, before David Kenin’s first news conference as Hallmark Channel’s programming chief, Kenin’s then-boss told him that he’d be introduced along with a requirement to make the fledgling enterprise a top-10 cable channel. “I said, `Could you just wait until I get back from the bar? I’m not going to be prepared to defend that right away,”‘ Kenin recalled, wryly. Five years later, Hallmark has achieved what seemed unlikely for a channel that started with what Kenin called flat-line ratings and gained early traction with reruns of hoary broadcast series including “The Rifleman.” Hallmark finished last year as the No. 9 advertiser-supported cable channel in U.S. households, the result of its self-proclaimed family-friendly prime-time lineup stuffed with TV movies as sweetly sentimental as a traditional Hallmark greeting card.