MUMBAI: Crown Media Holdings which owns and operates the Hallmark Channel, has entered into a definitive agreement to sell its international business to a group of investors for $242 million.
The sale by Crown Media includes the international versions of the Hallmark Channel. Hallmark which specialises in family oriented fare is distributed outside the US to about 60 million subscribers in 152 countries, The sale also covers the international rights to over 580 titles in the Crown Media library, and the state-of-the-art broadcast facility based in Denver, Colorado, which will continue to distribute the channels throughout the world.
The sale has been made to a group of investors comprised of Providence Equity Partners, 3i and UK television executive David Elstein.
As a result all employees of the international business as well as the broadcast facility will be employed by the investor group. Proceeds from the transaction will be used by Crown Media to reduce outstanding indebtedness under its bank credit facility, for the repayment of certain intercompany receivables and the payment of other liabilities.
It was only a matter of time before Crown Media took this decision. In 2003 Crown Media's international operations lost $21 million on about $83 million of revenue. The warning signs that Hallmark was not doing well in Asia came in 2002. That year the company closed down its Singapore sales office. It had also reduced the number feeds for the Asia Pacific region from seven to just two.
Dwelling on the transaction Crown Media president and CEO David Evans said, "We are very pleased to have signed this agreement. We are confident that the investor group will capitalise on its global media expertise to continue to expand this international business, while we focus our efforts on maintaining the tremendous growth in ratings and distribution we have been able to generate in our domestic business. From a financial perspective, this is an excellent opportunity for our company to reduce leverage and improve our overall capital structure."
The transaction is subject to customary closing conditions, including approval by the applicable regulatory authorities. The company expects to obtain approval and complete the transaction within six weeks.
Providence Equity Partners is a private investment firm. It specialises in equity investments in communications and media companies around the world. The principals of Providence Equity manage funds with over $9.0 billion in equity commitments.
Elstein is a former Channel 5 CEO. He now serves as the chairman of the British Screen Advisory Council, the Commercial Radio Companies Association, Really Useful Theatres Limited, Screen Digest Limited, Sports Network and Digital Classics.
