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Hallmark Channel on Mission to Up Revenue

Apr 5, 2004  •  Post A Comment

Hallmark Channel has a new greeting to send to Madison Avenue this upfront season.
After two years of growth, the network continues to add original movies and acquired programming. And now it wants advertisers to pay.
“We think we’re undervalued in the marketplace,” said Bill Abbott, executive VP of national advertising sales. Hallmark’s goal for the upfront is a 75 percent increase in revenue. “It’s hard to gain share and CPM [increases] in the same year, but we feel Hallmark represents a unique situation,” he said, because the channel is attracting a growing, upscale audience.
To achieve that goal, Mr. Abbott and his sales team will have to attract 150 clients, including 40 new accounts. He figures 25 percent of the increase will come from new business, while current advertisers must be persuaded to increase spending by 50 percent.
Hallmark is going to seek price increases of 3 percent to 8 percent above what other cable networks are getting as the upfront swings through.
Mr. Abbott said Hallmark plans to sell 60 percent to 65 percent of its commercial inventory during the upfront and reserve about 25 percent for the scatter market. The network will hold on to 10 percent for make-goods in case ratings fall short of guaranteed levels and another 5 percent to sell to advertisers such as Coca-Cola and Johnson & Johnson, which buy on a calendar-year basis rather than in the upfront.
It won’t be easy, Mr. Abbott acknowledged. The scatter market has been soft, which means it is likely that “the upfront will be softer than some of us would like.” At the same time, on the cable front, buyers believe there is a huge supply of inventory at general entertainment cable networks.
But Mr. Abbott is confident that Hallmark’s brand name and its original programming will help it “get around the reality of the numbers of impressions in cable.”
One leading ad buyer suggested that Hallmark has a chance. “They do have a very strong brand and they have done well with their numbers. I think naturally we would look to put more money in them because they’re growing, but obviously price is always a sensitive thing,” said Andy Donchin, director of national broadcast at Carat.
Title Sponsorships
Hallmark is making itself more attractive to advertisers by selling title sponsorships and other integrated ad packages to sponsors. After forming a special Sponsorship Solutions unit in January, Hallmark last week said Kraft Foods will be the exclusive national sponsor of the first two airings of “The Parent Trap” on June 13 and June 24.
Mr. Abbott said that with 150 advertisers to place in its shows, Hallmark can’t sell title sponsorships in all of its films. But he said he would like to have name sponsors for the majority of the films.
Hallmark would like sponsors to do more than put their names on its movies. The network is in talks with marketers about scripts that are in development so that marketers’ products can been integrated into productions, he said, adding that he wants the network to be known as the place to go for integrated marketing deals.
Original movies are the key to Hallmark’s original programming plans, said David Kenin, executive VP of programming. He plans to produce 12 original movies that will air mostly around holidays. Mr. Kenin said he would like to increase the number of original movies and attract younger stars to appear in them.
This year’s titles include the $50 million “King Solomon’s Mines,” starring Patrick Swayze, and the $55 million “La Femme Musketeer,” starring Gerard Depardieu. Both will premiere in June because the network has not been strong in the summertime, Mr. Kenin said.
Mr. Kenin said he won’t be producing original series or reality shows this season, because those pose “higher risk than we’re willing to embrace.” Hallmark could move into that area in 2005-06, he said.