After canceling daytime staple “The Martha Stewart Show” earlier this year, Crown Media Holdings Inc. of Studio City has gone back to its roots in made-for-TV movies.

The family-friendly fare has so far paid off for the company, which owns the Hallmark Channel and Hallmark Movie Channel.

Last week, Crown Media reported a sharp rise in operating profit, up 32 percent to $31.3 million for the third quarter. Revenue was up 4 percent to $77.1 million.

“During the third quarter, our family-friendly programming continued to be of high value to advertisers and viewers despite strong competition from the Summer Olympics,” said Bill Abbott, chief executive at Crown Media Family Networks, in a statement. Crown Media Family Networks oversees both Hallmark channels.

Hallmark Channel scored a ratings coup with “Puppy Love,” a made-for-TV movie about a couple who shares custody of a runaway dog. About 1.7 million households tuned in to the premier in September, making it the most watched original movie to air on the channel this year. The channel reaches about 87 million cable households, targets women ages 25 to 54. Part of the decision to drop “The Martha Stewart Show” earlier this year was to bring in younger viewers.

Crown Media has also been investing in original movies for the Hallmark Movie Channel, which reaches about 45 million cable households. During the quarter, the channel introduced offerings such as “Strawberry Summer,” a movie about a small town putting on a country music festival.

Abbott said the expanded slate of movies has recently helped Hallmark Movie Channel increase its distribution and attract new advertisers in retail, packaged goods and pharmaceuticals.

The quarterly profit might be a small feel-good story for some of Crown Media’s investors, who sued after the billionaire Hall family of Kansas City, Mo., announced a plan to recapitalize the company in 2009. The deal, which was completed in 2010, gave the family’s Hallmark Cards Inc. about 90 percent of Crown Media’s shares and diluted other investors’ shares. The investors’ suit was dismissed last year.

In a separate filing last week, Crown Media announced that 40 million of its shares, about 11 percent of the company’s stock, were transferred by Hallmark Cards to a German subsidiary of the company for tax purposes. That move could save Crown Media hundreds of millions in taxes on future profits, one large shareholder said.

Shares jumped 4.6 percent to close at $1.82 on Nov. 1, the day earnings were released.

Added Dimension

RealD Inc.’s business is to get as many theaters to use its 3-D projection technology as possible. That’s because the company gets a 50 cent cut of each 3-D ticket sale.

But it’s just as crucial for the Beverly Hills company to make sure filmmakers are on board with making movies in the format so there are enough 3-D movies to fill those seats.

Chief Executive Michael V. Lewis said as much in an earnings conference call with analysts last week when he noted that fewer 3-D movies are coming out this year than the company had expected. As a result, he’s been hitting the road to sell filmmakers on the technology.

“I have personally been spending a growing amount of my time in recent months meeting with studios and filmmakers to educate the filmmaking community about 3-D trends and to encourage the creation of 3-D content,” he said in the call.

RealD narrowly missed analyst expectations for the quarter ended in September and lowered its guidance for the rest of its fiscal year, which ends in March. RealD reported a net loss of $4.2 million for the quarter on revenues of $55 million.

The shortfall of content this year is partly due to studios pushing back release dates for big 3-D movies lately, such as Warner Bros., which moved “The Great Gatsby” from this Christmas to May.

There have also been missed opportunities, such as the huge-grossing “The Dark Knight Rises,” which was not released in 3-D.

About 35 movies will be released in 3-D this year and about 40 are expected next year.

Next year’s increase is cause for optimism for RealD, said James Goss, an analyst who follows the company at Barrington Research Associates Inc. in Chicago.

He said the coming crop of 3-D films also show there’s been progress in getting respected filmmakers, including Ang Lee, director of “Life of Pi,” and Baz Luhrmann, director of “Great Gatsby,” to use the format.

“Getting the thought leaders among the producers and directors helps a lot,” Goss said. “Those are the sorts of things that can tilt it to be used beyond animated fare, big blockbusters and action adventures. It gets to be used in other, perhaps subtle, interesting ways for broader parts of the audience.”

Staff reporter Jonathan Polakoff can be reached at jpolakoff@labusinessjournal.com or (323) 549-5225, ext. 226.

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