• by Wayne Friedman , Staff Writer, April 19, 2006

Tarnish on the crown: Hallmark is back to more polishing.

Crown Media Holdings Inc. said Monday it has canceled its eight-month effort to sell the Hallmark Channel. Then the company's stock promptly plunged 18 percent on the news.

Too bad for the people at Hallmark Channel who worked their butts off--especially in making it one of the big rating growth stories in cable.

Now strapped with the fact that no one is interested in spending $2 billion, or $1.5 billion, or perhaps even $1 billion for a full-fledged, fully distributed cable network, the real work has started--and, of course, that won't be a pretty picture. We are talking major cuts--especially in light of the $1 billion in debt.

There was also a question of weak cable and satellite affiliate agreements. But could it be, perhaps, that the network was perhaps too strong in adults and women 25-54 demographics--viewers you can get just about anywhere in the cable universe? That can put any company into a commodity-like situation.

The good news was that--especially in prime-time, with its movies--Hallmark was at least recognizing the glut problem and offering advertisers far less clutter and slimmer commercial pods than many cable networks. That's a big advantage for marketers.

Blame it on Hallmark's being an independent channel. These days it's tough being an media island--especially if the wind blows cold. Viewers get the sniffles, and all of sudden they're watching YouTube.com.

It's sad because we all know that in 2001 Walt Disney Co. dramatically overpaid for the Fox Family Channel--that's $5 billion or so--for a network about the same size as Hallmark. Hallmark just put itself on the market about five years too late.

Capitalism works its drama when stuff like this happens, when there are no business trends to make sense of, when other business pricing goes in a different direction, like oil at $71 a gallon.

Now David Evans, president and CEO of Crown Media, believes Crown's "greatest value would be derived from continued operations of the business."

Yeah, you say that now. Talk about misreading a market. Where were you about a week ago? How about a couple of months ago?