Crown Media Is An Attractive Stock Right Now

Crown Media (CRWN) owns two pay TV channels: the Hallmark Channel, and Hallmark Movies and Mysteries (formerly Hallmark Movie Channel). The company has delivered solid operating results recently, culminating in a better-than-expected Q4 just reported Friday, and encouraging guidance for Q1. Furthermore, the firm still has some runway to improve its operations and balance sheet, giving new investors in the stock more potential for gains. MagicDiligence believes the stock looks attractive at current valuations, but let’s look a little closer…

Your Mother’s (and Grandmother’s) Favorite Channel

Hallmark Channel reaches 82% of all U.S. paid TV subscribers. The primary audience is women ages 25-54, with programming such as reruns of Golden GirlsLittle House On The PrairieI Love Lucy,Fraiser, and Murder She Wrote – in addition to some newer original series like Cedar Cove and When Calls the Heart.

Hallmark Movies and Mysteries was recently rebranded from Hallmark Movie Channel last fall. As the name implies, it is emphasizing programming around the mystery genre, as well as continuing to air movies from the Hallmark Hall of Fame collection. This channel reaches just 53% of all U.S. paid TV subscribers, with 5.5% subscriber growth in 2014. Extending distribution of Hallmark Movies and Mysteries is a key growth opportunity for Crown.

I’ve always liked pay TV channels because of their dual revenue sources of over-the-air advertising and subscriber fees. In Crown Media’s case, the revenue breakdown is roughly 80/20 in favor of advertising, with ads driving pretty much all of the 11% growth in revenues in 2014.

The Christmas season is where the Hallmark channels really shine. Indeed, Crown Media generates over a third of its ad revenues in Q4. The channel is well known for its slate of popular Christmas movies – the Hallmark Hall of Fame collection is heavily weighted towards holiday fare. Just this year, Hallmark Channel’s Countdown to Christmas 2014 was #1 on cable, and The 12 New Movies of Christmas averaged a 2.6 rating, making it #1 in weekend prime time.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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