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Crown Media Holdings Announces Operating Results FOR THIRD QUARTER OF 2015

The following excerpt is from the company's SEC filing.

STUDIO CITY, Calif. November 2, 2015 -

Crown Media Holdings, Inc. (NASDAQ:CRWN) today reported its operating results for the three and nine months ended September 30, 2015.

Operating Highlights

Subscriber Growth.

With the re-launch of the channels on AT&T on July 23

, the Company has reached the highest distribution levels since August 2010, with over 90 million households subscribing to Hallmark Channel and over 60 million households to Hallmark Movies & Mysteries.

Double-digit advertising revenue.

Subscriber increases coupled with ratings improvements on Hall mark Movies & Mysteries has resulted in 17% advertising revenue growth quarter over quarter.

Season over season audience growth for

Home & Family

Home & Family

finished its third season on September 11

, averaging 63,000 Women 25 to 54 for the season, a 66% increase over season two.

#1 rated cable network on Saturdays 8pm time period.

Cedar Cove

completed its third season on September 26

to a 1.8 household rating and 268,000 Women 25 to 54. Over the eleven weeks and nineteen airings, the series attracted 8.8 million unduplicated viewers and averaged a 1.6 household rating.

Record breaking ratings for Hallmark Movies & Mysteries.

For the fourth consecutive quarter, Hallmark Movies & Mysteries has experienced double-digit audience growth across key demographics compared to the similar period a year earlier, with Women 25 to 54, in total day and prime time, up 42% and 33%, respectively.

Refinance.

In July 2015, the Company completed its refinance of the balance sheet, replacing $99.6 million of bank debt and $271.5 million of 10.5% notes with $350.0 million of variable rate bank debt, $200.0 million of which has been swapped for a fixed rate of 3.4%.

We are pleased with the accomplishments achieved during Third Quarter, including the successful re-launch of our channels on AT&T, the culmination of our debt refinancing and the continued double-digit ratings growth for Hallmark Movies & Mysteries said Bill Abbott, President and CEO of Crown Media Family Networks. In a continuously changing marketplace, we are achieving historical audience levels and revenue milestones, underlining our ability to engage viewers. This momentum, along with our robust holiday slate, should pave the way to a strong fourth quarter.

Financial Results

Historical financial information is provided in tables at the end of this release.

Operating Results

For the third quarter of 2015, Crown Media reported revenue of $106.2 million, a $12.9 million or 14% increase from $93.3 million in the third quarter of 2014. Advertising revenue increased 17% to $83.6 million from $71.4 million in the third quarter of 2014 due to improved ratings on Hallmark Movies & Mysteries and subscriber and audience growth across both channels. Subscriber fee revenue increased 6% to $21.9 million from $20.7 million in the third quarter of 2014 due to revenue from one distributor. Other revenue decreased $0.5 million for the quarter to $0.7 million as compared to $1.3 million in the prior years quarter due to the timing of the Companys licensing arrangements in secondary markets.

For the nine months ended September 30, 2015, Crown Media reported revenue of $320.0 million, a $38.6 million or 14% increase from $281.4 million for the nine months ended September 30, 2014. Advertising revenue increased 16% to $252.1 million from $216.6 million for the nine months ended September 30, 2014. The increase in advertising revenue is due to audience and pricing growth across both channels. Subscriber fee revenue increased 1% to $63.3 million from $62.6 million during the nine months ended September 30, 2014. Other revenue increased $2.4 million to $4.5 million period over period from $2.1 million due increase in SVOD licensing revenue from two original scripted series during 2015 as compared to one original scripted series during 2014.

For the third quarter of 2015, cost of services increased 20% to $49.2 million from $41.0 million during the same quarter of 2014. Programming costs increased 18% quarter over quarter due higher costs associated with our original scripted series and daytime programming. Operating costs increased $1.5 million quarter over quarter due to increases in employee and residual costs.

For the nine months ended September 30, 2015, cost of services increased 7% to $135.4 million from $126.4 million during the nine months ended September 30, 2014. Programming costs increased 5% period over period due to the timing and mix of aired programming. Operating costs increased $3.8 million period over period due to an increase in employee costs, including severance, bad debt expense and residual costs.

Selling, general and administrative expense (including depreciation and amortization expense) increased 18% to $19.1 million for the third quarter of 2015 from $16.2 million during the same quarter of 2014 due to increases in employee costs, including contingent compensation.

Selling, general and administrative expense (including depreciation and amortization expense) increased 15% to $57.0 million for the nine months ended September 30, 2015, from $49.4 million during the same period of 2014 due to increases in employee costs, including contingent compensation and severance, and increases in research costs.

Marketing expense decreased $0.4 million during the third quarter of 2015 compared to the third quarter of 2014 due to the timing of marketing spends. Marketing expense increased $1.4 million during the nine months ended September 30, 2015, compared to the same period of 2014, due to the marketing campaign surrounding the

Good Witch

series in 2015.

Interest expense decreased $5.7 million for the third...


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