A Crown Maybe Worth Donning

Crown Media (NASDAQ:CRWN) may very well be the tortoise in media's version of the tale of the hare and the tortoise. The company, while not close to being profitable, nevertheless continues to provide quality television programming to a growing number of cable and satellite subscribers worldwide, along with generating heady returns for its investors.

The financial metrics for the company's most recent quarter represented an improvement from the June 2006 quarter, although they were still largely uninspiring on their face. The net loss for the quarter narrowed to $43.7 million, or $0.42 a share, compared to a net loss of $227.4 million, or $2.17 a share, last year. But as you might suspect, the year-ago quarter included $193.2 million in film asset impairments and amortization charges.

However, some of the other numbers associated with this company are considerably more inspiring. For instance, its Hallmark Channel is now available to about 83 million subscribers, a 13% increase over last year. And in an era of slipping adverting revenues for all sorts of media companies, Crown's ad sales increased 13% year over year. Further, Nielsen ranks the Hallmark Channel 11th among advertising-supported cable networks, tied with Discovery Holding's (NASDAQ:DISCA) Discovery Channel and Time Warner's (NYSE:TWX) Court TV.

Crown will launch Hallmark Movie Channel HD, a high-definition sister network to its standard definition movie channel, in the first quarter of 2008. Further, the company's operating performance is already benefiting from recent new pacts with satellite TV provider EchoStar (NASDAQ:DISH) and cable operator Mediacom (NASDAQ:MCCC). But perhaps most important from a Foolish perspective, its shares have appreciated over 80% in the past year.

Crown is partly owned by Kansas City-based Hallmark Cards. In fact, last month Crown announced that it would reimburse Hallmark $33 million, the amount it received from its parent in a tax-sharing agreement that was later disallowed by the IRS. Along with Hallmark Cards, Crown's other investors include media mogul John Malone's Liberty Media and DirecTV (NYSE:DTV), the largest of the satellite video providers. (DirecTV just reported earnings as well.)

So it might just be that, in a time when it's progressively more difficult to find media investments that yield solid returns, Fools might consider the Crown Media tortoise. Sure, it's slow, but it's also steady, and there's a lot to be said for the quality it offers to its viewers and its investors.

For related Foolishness:

• Don't Wear This Crown
• No Crowning Achievement Here
• Can Cable Still Reward Shareholders?

Time Warner is a Motley Fool Stock Advisor recommendation. Find out what other companies have been singled out by Tom and David Gardner in this market-beating newsletter service with a free 30-day trial.  

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned, but he's a serious fan of the Hallmark Channel. He welcomes your questions or comments. The Motley Fool has a disclosure policy.