Although Hallmark Channel is known for uplifting family fare, its own story could have a less happy ending.
Crown Media Holdings, the cable network’s parent, is undergoing a painful process of restructuring its balance sheet at the same time the channel is attempting to revamp its family-oriented programming.
Just last week Crown cut 15 jobs, or 8 percent of its work force, and a proposed plan to trim its debt load is meeting resistance from some bondholders.
The stakes are huge: Hallmark is one of the last remaining independent cable networks, but its ability to compete against larger rivals is hampered because of that financial load and because it can’t leverage a large number of channels to extract better deals from cable and satellite operators. Crown’s cable properties consist only of the flagship Hallmark Channel and its smaller sibling, Hallmark Movie Channel.
But Crown, which is 70 percent-owned by greeting card giant Hallmark, is struggling. Hallmark, the parent company, loaned Crown $1.1 billion, and Crown isn’t likely to pay that back.
As such, Hallmark has proposed slashing Crown’s debt in half in exchange for additional equity totaling $550 million.
That move has angered Crown’s minority shareholders, and spurred independent Crown board members to hire Morgan Stanley to advise them on the Hallmark offer. A recommendation from Morgan Stanley is expected early next month.
Although a source familiar with the matter said there have been no settlement talks with Hallmark, it appears unlikely that the parent company would force Crown into bankruptcy because of the embarrassment of forcing its own channel out of business.
However, it appears unlikely a white knight waits in the wings.
A few years ago, Crown attempted to pretty itself up for a sale when it hired media veteran Henry Schleiff as CEO. Crown enlisted Citigroup to oversee an auction, but things barely got off the ground because of the company’s debt load.
Schleiff has since left the company, and Bill Abbott, once the channel’s head of ad sales, was named CEO.
Under Abbott, the channel has attempted to shake up its staff and shift its programming.
One strategy involves creating a clearer distinction between the flagship channel, which is carried in 88 million homes, and the movie-channel offshoot, which is available in 30 million households. The plan is to gradually move most of the Hallmark movies to the smaller channel while the main channel sticks with a mixture of movies, classic TV shows and holiday specials.
“It’s an evolution not a revolution,” Abbott explained to The Post.