Crown Media Holdings Announces 69.8% Increase in Total Revenues and 37.4% Increase in Hallmark Channel and Odyssey Network Subscribers for First Quarter 2001.Business Editors GREENWOOD Greenwood. 1 City (1990 pop. 26,265), Johnson co., central Ind.; settled 1822, inc. as a city 1960. A residential suburb of Indianapolis, Greenwood is in a retail shopping area. Manufactures include motor vehicle parts and metal products. VILLAGE, Colo.--(BUSINESS WIRE)--May 3, 2001 Crown Media Holdings, Inc. (Nasdaq: CRWN CRWN Composite Reconfigurable Wireless Network ) (AEX AEX See: Amsterdam Exchange : CRWN) ("Crown Media" or the "Company") today reported pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma revenues of $23.2 million for the first quarter of 2001, a 69.8% increase from $13.7 million for the first quarter of 2000. Operating Highlights for the Quarter
-- Hallmark Channel and Odyssey Network subscribers increased 37.4% to 67.6
million as of March 31, 2001, from 49.2 million subscribers as of March 31,
2000.
-- Hallmark Channel, Crown Media's international channel, ended the first
quarter 2001 with 38.6 million subscribers, a 71.6% increase from the prior
year's comparable quarter and a 15.2% increase from the fourth quarter of 2000.
During the first quarter, the channel was launched in South Korea to over 1.2
million subscribers and expanded its distribution in Taiwan to a total of 4.0
million subscribers.
-- Odyssey Network, Crown Media's domestic channel, ended the quarter with 29.0
million subscribers, an increase of 9.4%, or 2.5 million subscribers, from the
fourth quarter of 2000. Odyssey remains in active negotiations with Cox,
Comcast and Cablevision, having previously negotiated long-term distribution
agreements with AT&T, TimeWarner, EchoStar, Adelphia, Charter, and DirecTV.
-- Crown Media completed its agreement with German media company EM.TV
Merchandising AG, issuing EM.TV approximately 5.4 million shares of Class A
common stock, in exchange for EM.TV's 22.5% interest in Odyssey Network,
thereby giving Crown Media ownership of 100% of the common interests in Odyssey
Network.
-- With complete control of Odyssey Network, Crown Media and Hallmark Cards
announced plans to rebrand the Odyssey Network to the Hallmark Channel on
August 6, 2001, creating a global Hallmark Channel.
-- Shortly after the close of the quarter, Crown Media and a wholly-owned
subsidiary of Hallmark Entertainment, Inc., Hallmark Entertainment
Distribution, LLC ("HED"), reached a definitive agreement under which Crown
Media will acquire approximately 700 titles from the film library of HED. The
purchase price is the assumption of $220 million of debt and payables related
to the films and the issuance of shares of Crown Media Class A common stock
based upon the average closing prices of Crown Media Class A common stock from
November 6, 2000 to the closing of the transaction, subject to a collar on the
stock price. Using the average closing prices from November 6, 2000 to April
30, 2001 (the date of signing the agreement), the value of the stock would be
$600 million, resulting in a total purchase price of approximately $820
million. This transaction is subject to stockholder approval at Crown Media's
annual meeting, scheduled to be held on June 7, 2001.
"Over the past three months we've we've Contraction of we have. we've have made significant advances on the distribution front, adding almost eight million subscribers across all of our markets," stated David Evans David Evans may mean:
v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our business and enhanced our growth opportunities." Mr. Evans Ev·ans , Herbert McLean 1882-1971. American anatomist who isolated four pituitary hormones and discovered vitamin E (1922). continued, "With the rebranding Rebranding is the process by which a product or service developed with one brand or company or product line affiliation is marketed or distributed with a different identity. of our U.S. network to the Hallmark hallmark, mark impressed on silverwork or goldwork to signify official approval of the standard of purity of the metal, also called plate mark. The hallmark was introduced by statute in England in 1300 and enforced by the Goldsmiths' Hall, London. Channel, we have created one of the few global television networks. As the Hallmark Channel, we are significantly increasing our brand awareness with consumers, distributors and advertisers who are all looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. high-quality content that's family-focused. And with our proposed transaction to acquire over 700 titles from Hallmark Entertainment Distribution's film library, we expect to secure certain cable, broadcast and interactive distribution rights to that content, which has come to define, not only our channels, but also our company. We will be able to create an additional revenue stream by licensing the content we don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. use to third parties as well as realize substantial savings in our programming expenses. The combination of these two factors will allow us to accelerate our EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations . Additionally, with this content, we will be able to substantially enhance the offerings and revenue potential of Crown Interactive as we begin to roll it out to other markets over the course of the year." Financial Results On May 9, 2000, Crown Media Holdings completed its initial public offering, acquired 100% of Crown Media International, Inc. and acquired 77.5% of Odyssey Odyssey (ŏd`ĭsē): see Homer. Odyssey Homer’s long, narrative poem centered on Odysseus. [Gk. Lit.: Odyssey] See : Epic Odyssey Holdings, L.L.C. Prior to that date, Crown Media Holdings did not have any significant operations. On March 15, 2001, Crown Media acquired the remaining 22.5% of common interests in Odyssey Holdings and the 50% interest in H&H Programming-Asia, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , called The Kermit Channel, not previously owned by Crown Media. The condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge of Crown Media Holdings include the assets, liabilities and results of Crown Media International, Inc. as a predecessor corporation. The following unaudited pro forma information consolidates the results of operations of Crown Media Holdings, Crown Media International, Inc., Odyssey Holdings, L.L.C. and H&H Programming - Asia, LLC, as if the reorganization and the acquisitions described above involving these entities had occurred on January 1st of the periods presented, along with certain pro forma adjustments to give effect to amortization of goodwill and other intangibles and other adjustments. Crown Media reported pro forma revenue of $23.2 million for the first quarter of 2001, a 69.8% increase from $13.7 million for the first quarter of 2000. Subscriber fees revenue in the first quarter increased 44.6% to $16.0 million, from $11.1 million in the prior year's quarter, reflecting new market launches and an increase in the Company's subscriber base. Advertising and other revenue increased 177.4% to $7.2 million during the quarter, from $2.6 million in the first quarter of 2000, as the Company's growing subscriber base and channel programming became more attractive to advertisers. For the first quarter of 2001, total pro forma cost of services increased to $35.5 million from $23.9 million during the same quarter of 2000. Within cost of services, programming expenses rose 58.4% quarter over quarter to $20.9 million as the Company continues to refine and enhance the breadth of the programming aired on its channels. Operating costs operating costs npl → gastos mpl operacionales , which consist of playback Playback could mean:
removal of most of the comb of day-old chickens. See also decombing. and subtitling, transponder A receiver/transmitter on a communications satellite. It receives a microwave signal from earth (uplink), amplifies it and retransmits it back to earth at a different frequency (downlink). A satellite has several transponders. and interstitial In a separate window. See interstitial ad. (World-Wide Web) interstitial - A World-Wide Web page that appears before the expected content page. Interstitials can be used for advertising (intermercial, transition ad) or to confirm that the user is old enough to view the expenses, increased 36.2% to $14.6 million for the first quarter of 2001. The overall increase in cost of services was primarily due to the new launch and expansion in Asia and additional programming acquisitions. Pro forma selling, general and administrative expenses increased to $18.2 million for the three months ended March 31, 2001, from $14.7 million in the year earlier period. Pro forma marketing expenses increased to $10.6 million for the three months ended March 31, 2001, from $3.4 million in the year earlier period. In the first quarter of 2001, several original movies were aired on the Odyssey Network, including Hamlet Hamlet Tragic hero who tarries and broods over revenge and suicide. [Br. Lit.: Hamlet] See : Indecision Hamlet introspective, vacillating Prince of Denmark. [Br. Lit. and Voyage VOYAGE, marine law. The passage of a ship upon the seas, from one port to another, or to several ports. 2. Every voyage must have a terminus a quo and a terminus ad quem. of the Unicorn, which were supported by aggressive marketing campaigns to drive consumer awareness and demand for the channel. Marketing expenses also increased due to expenses associated with the announced rebranding of Crown Media's international and domestic channels as the Hallmark Channel. The pro forma loss before interest, taxes, depreciation and amortization (EBITDA) totaled $39.2 million for the first quarter of 2001, compared to a pro forma EBITDA loss of $27.5 million for the same period last year. The pro forma net loss for the three month period ended March 31, 2001 totaled $47.9 million, or $0.73 per share, compared to $34.2 million, or $0.52 per share, in the first quarter of 2000. At March 31, 2001 Crown Media had cash and cash equivalents totaling $11.6 million. During the first quarter, Crown Media put into place a $150 million line of credit from H.C. Crown Corp., a subsidiary of Hallmark Cards Hallmark Cards, a privately owned American company based in Kansas City, Missouri, is the largest manufacturer of greeting cards in the United States. Approximately 50% of greeting cards sent in the United States every year are manufactured by Hallmark. . "This past quarter has been about creating value. Value for consumers, distributors, advertisers and shareholders. Today, we are in the enviable en·vi·a·ble adj. So desirable as to arouse envy: "the enviable English quality of being able to be mute without unrest" Henry James. position of operating one of the few global television networks with one of the premiere brand names in the world. We have access to some of the most recognized programming on television today. And we are investing in the future, exploring new ways to deliver not only our programming, but also a wide array of products and services, across new distribution outlets. We are successfully leveraging our programming, brand, global presence and partnerships to grow and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our business and create value for all of our constituencies," concluded Evans. Conference Call and Webcast to be Held May 4 at 11:00 a.m. ET Crown Media Holdings' management will conduct a conference call tomorrow morning at 11:00 a.m. Eastern Time to discuss the first quarter 2001 results. Investors and interested parties may listen to the call via a live webcast accessible through the investor relations Investor relations The process by which the corporation communicates with its investors. section of the Company's web site at www.crownmedia.net. To listen, please register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. audio software at the site at least 15 minutes prior to the start time. The webcast will be available on the site for approximately three months, while a telephone replay of the call is available for 7 days beginning at 1:00 p.m. Eastern Time, May 4, at 800-633-8284 or 858-812-6440 (international callers), reservation # 18520806. About Crown Media Holdings, Inc. Crown Media Holdings, Inc. owns and operates pay television channels dedicated to high quality, broad appeal, entertainment programming. The company currently operates and distributes two cable channels: Odyssey Network/the Hallmark Channel in the U.S. and the Hallmark Channel in more than 100 international markets. The combined channels have almost 68 million subscribers worldwide. SEC Matters In connection with the transaction described above, Crown Media will be filing a proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. with the Securities and Exchange Commission. Stockholders of Crown Media are urged to read the proxy statement when it becomes available because it will contain important information regarding this transaction. Investors and shareholders may obtain a free copy of the proxy statement when it becomes available at the SEC's website at www.sec.gov. Crown Media, its Board of Directors, executive officers and employees, and certain other persons, may be deemed to be participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies of Crown Media stockholders to approve the transaction for the films. These individuals may have interests in the transaction, including as a result of holding options or shares of Crown Media. Information concerning these individuals and their interests in the transaction and the participants in the solicitation will be contained in the proxy statement to be filed with the Securities and Exchange Commission in connection with the proposed transaction. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements contained in this press release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and that are based on management's current expectations, estimates and projections. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Such risks and uncertainties include: competition for distribution of channels, viewers, advertisers, and the acquisition of programming; fluctuations in the availability of programming; fluctuations in demand for the programming Crown Media airs on its channels; and other risks detailed in the Company's filings with the Securities and Exchange Commission, including the Risk Factors stated in the Company's 10-K Report for the year ended December 31, 2000 and 10-Q Report for the quarter ended March 31, 2001. Crown Media Holdings is not undertaking any obligation to release publicly any updates to any forward looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect the occurrence of unanticipated events.
Crown Media Holdings, Inc.
Selected Pro Forma Financial Information(1)
($ in thousands, except share and per share data)
Three Months Ended Year Ended
March 31, March 31, December 31,
2000 2001 2000
----------------------------------------
Revenues:
Subscriber Fees $11,071 $16,006 $51,890
Advertising 2,279 7,162 19,724
Other 311 22 1,522
--- -- -----
Total Revenues 13,661 23,190 73,136
Cost of Services:
Progr. Costs:
Affiliates 9,669 15,267 48,401
Progr. Costs:
Non-Affiliates 3,528 5,643 15,643
Operating Costs 10,738 14,624 48,142
------ ------ ------
Total Cost of Services 23,935 35,534 112,186
Selling, Gen. & Admin.
Expenses 14,714 18,198 64,630
Marketing Expenses 3,448 10,642 25,176
Amortization of Goodwill 5,425 5,425 21,700
----- ----- ------
Loss from Operations $(33,861) $(46,609) $(150,556)
========== ============= ============
Net Loss $(34,198) $(47,865) $(151,728)
========== ============= ============
Net Loss per Share $ (0.52) $ (0.73) $ (2.32)
========== ============= ============
Weighted Avg. Shares Out. 65,377 65,415 65,385
(1) On May 9, 2000, Crown Media Holdings completed its initial public
offering, acquired 100% of Crown Media International, Inc. and
acquired 77.5% of Odyssey Holdings, LLC. Prior to that date, Crown
Media Holdings did not have any significant operations. On March 15,
2001, Crown Media acquired the remaining 22.5% of common interests in
Odyssey Holdings and the 50% interest in H&H Programming-Asia, LLC,
called The Kermit Channel, not previously owned by Crown Media
Holdings. The condensed consolidated financial statements of Crown
Media Holdings include the assets, liabilities and results of Crown
Media International, Inc. as a predecessor corporation. The
above-stated unaudited pro forma information combines the results of
operations of Crown Media Holdings, Crown Media International, Inc.,
Odyssey Holdings, LLC and H&H Programming - Asia, LLC, as if the
reorganization and the acquisitions described above involving these
entities had occurred on January 1st of the periods presented, along
with certain pro forma adjustments to give effect to amortization of
goodwill and other intangibles and other adjustments. The pro forma
financial data is not necessarily indicative of results of operations
that would have occurred had the initial public offering,
reorganization and the acquisitions described above been completed as
of, or at the beginning, the periods presented or that it might be
obtained in the future. Certain reclassifications have been made to
conform prior periods' data to the current presentation. These
reclassifications have no effect on the reported pro forma net loss.
Additionally, during the year, adjustments were made to goodwill and
other intangibles as deemed necessary and reflected in the above
financial statements.
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