Crown Media 10-Q 3 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 01, 2016
Document and Entity Information
Entity Registrant Name	CROWN MEDIA HOLDINGS INC
Entity Central Index Key	1,103,837
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		359,675,936
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 117,345	$ 50,604
Accounts receivable, less allowance for doubtful accounts of $251 and $420, respectively	124,481	155,813
Programming rights	105,432	108,000
Prepaid programming rights	388
Prepaid and other assets	3,988	4,109
Total current assets	351,634	318,526
Long-term receivable	426	293
Programming rights	289,412	272,016
Prepaid programming rights	21,796	23,947
Property and equipment, net	8,193	8,588
Deferred tax assets, net	131,064	146,180
Debt issuance costs, net	760	805
Prepaid and other assets	6,840	3,749
Goodwill	314,033	314,033
Total assets	1,124,158	1,088,137
LIABILITIES:
Accounts payable and accrued liabilities	22,648	30,920
Audience deficiency reserve liability	11,173	10,928
Programming rights payable	71,260	73,654
Payables to Hallmark Cards affiliates	658	353
Interest payable	1,394	1,266
Current maturities of long-term debt	16,250	12,188
Total current liabilities	123,383	129,309
Accrued liabilities	22,696	19,399
Programming rights payable	58,687	48,909
Derivative liability	5,145	735
Long-term debt, net of current maturities	306,372	310,222
Total liabilities	$ 516,283	$ 508,574
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock, $.01 par value; 500,000,000 shares authorized; 359,675,936 shares issued and outstanding as of both December 31, 2015 and March 31, 2016	$ 3,597	$ 3,597
Paid-in capital	2,062,818	2,062,818
Accumulated comprehensive loss	(3,012)	(158)
Accumulated deficit	(1,455,528)	(1,486,694)
Total stockholders' equity	607,875	579,563
Total liabilities and stockholders' equity	$ 1,124,158	$ 1,088,137

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 420	$ 251
Class A common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Class A common stock, shares authorized	500,000,000	500,000,000
Class A common stock, shares issued	359,675,936	359,675,936
Class A common stock, shares outstanding	359,675,936	359,675,936

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue:
Advertising	$ 100,763	$ 78,378
Advertising by Hallmark Cards		759
Subscriber fees	21,736	20,896
Other revenue	1,724	479
Total revenue, net	124,223	100,512
Programming costs
Non-affiliates	40,725	33,818
Hallmark Cards affiliate	762	940
Other costs of services	5,491	4,455
Total cost of services	46,978	39,213
Selling, general and administrative expense (exclusive of depreciation and amortization expense shown separately below)	19,423	17,572
Marketing expense	4,675	4,608
Depreciation and amortization expense	856	679
Income from continuing operations before interest and income tax expense	52,291	38,440
Interest income	18	48
Interest expense	(3,024)	(9,137)
Income before income tax expense	49,285	29,351
Income tax expense	(18,119)	(10,845)
Net income	31,166	18,506
Other comprehensive income (loss):
Unrealized loss on derivatives, net of tax	(2,854)
Comprehensive income (loss)	$ 28,312	$ 18,506
Weighted average number of shares of common stock outstanding, basic and diluted	359,676	359,676
Net income per share from operations, basic and diluted	$ 0.09	$ 0.05

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 31,166,000	$ 18,506,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	43,362,000	36,515,000
Provision for allowance for doubtful accounts	963,000	130,000
Loss on sale of property and equipment		8,000
Deferred tax expense	16,771,000	10,251,000
Changes in operating assets and liabilities:
Decrease in accounts receivable	31,043,000	18,507,000
Additions to programming rights	(56,316,000)	(55,254,000)
Decrease (increase) in prepaid and other assets	(2,015,000)	1,995,000
Decrease in accounts payable, accrued and other liabilities	(4,827,000)	(4,945,000)
(Decrease) increase in interest payable	109,000	(7,174,000)
Decrease in derivative payable	(99,000)
Increase in programming rights payable	7,385,000	5,370,000
Decrease in payables to Hallmark Cards affiliates	(6,000)
Net cash provided by operating activities	67,536,000	23,909,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(416,000)	(201,000)
Proceeds from disposal of property and equipment		5,000
Net cash used in investing activities	(416,000)	(196,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on the 2011 Term Loan		(20,000,000)
Principal payments on capital lease obligations	(379,000)	(347,000)
Net cash used in financing activities	(379,000)	(20,347,000)
Net increase in cash and cash equivalents	66,741,000	3,366,000
Cash and cash equivalents, beginning of period	50,604,000	60,888,000
Cash and cash equivalents, end of period	117,345,000	64,254,000
Supplemental disclosure of cash and non-cash activities:
Interest paid	2,679,000	15,815,000
Taxes Paid		109,000
Capital expenditures included in accounts payable	$ 3,000	$ 137,000

Business and Organization

Business and Organization	3 Months Ended
	Mar. 31, 2016
Business and Organization.
Business and Organization	1. Business and Organization Crown Media Holdings through its wholly owned subsidiary Crown Media United States, LLC (“Crown Media United States”), owns and operates pay television networks dedicated to high quality entertainment programming for adults and families in the United States. Majority ownership of the Company is held by Hallmark Cards through its indirect wholly-owned subsidiary CM Merger Co. The Company’s continuing operations are currently organized into one operating segment, the Networks.

Summary of Significant Accounti

Summary of Significant Accounting Policies and Estimates	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies and Estimates
Summary of Significant Accounting Policies and Estimates	2. Summary of Significant Accounting Policies and Estimates Interim Financial Statements In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related interim unaudited condensed consolidated statements of operations and comprehensive income (loss) and cash flows include all adjustments, consisting of normal recurring items necessary for their fair presentation in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Crown Media Holdings and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in accordance with GAAP requires the consideration of events or transactions that occur after the balance sheet date but before the financial statements are issued. Depending on the nature of the subsequent event, financial statement recognition or disclosure of the subsequent event may be required. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. Such estimates include the collectibility of accounts receivable, the valuation of goodwill, intangible assets and other long-lived assets, the net realizable value of programming rights, the fair value of film assets, legal contingencies, indemnifications, barter transactions, and assumptions used in the calculation of income taxes and related valuation allowance, among others. All of the estimates that are employed are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. Allowance for Doubtful Accounts The allowance for doubtful accounts is based upon the Company’s assessment of probable loss related to uncollectible accounts receivable. The Company uses a number of factors in determining the allowance, including, among other things, the financial condition of specific customers and collection trends. The Company’s bad debt expense was $130,000 and $963,000 for the three months ended March 31, 2015 and 2016, respectively. Barter Transactions The Company enters into transactions that involve the exchange of its on air advertising spots, in part, for other products and services, such as programming rights. Programming rights and the related deferred advertising revenue that result from such transactions are recognized at the estimated fair value of the advertising spots conveyed when the programming is available for telecast. Barter programming rights are amortized in the same manner as non-barter programming rights and advertising revenue is recognized when delivered. The Company recognized $982,000 and $727,000 in barter advertising revenue during the three months ended March 31, 2015 and 2016, respectively. The Company recognized $881,000 and $631,000 in barter expense included in programming costs on the unaudited condensed consolidated statements of operations and comprehensive income (loss) during the three months ended March 31, 2015 and 2016, respectively. Film Assets Included in Long-Term Programming Rights The Company amortizes its film assets using the individual-film-forecast-computation method. The individual-film-forecast-computation method amortizes such assets in the same ratio that current period actual revenue bears to estimated ultimate future revenues. On a quarterly basis, the Company assesses whether events or circumstances have changed indicating that the fair value of a film is lower than its unamortized cost or carrying value. If the carrying value of any individual film asset exceeds its fair value, the film asset is written-down to its estimated fair value. The Company reviews its estimates of ultimate future revenues and participation costs as of each reporting date to reflect currently available information. Estimated ultimate future revenues are based on sales plans and other factors, all of which require significant judgment and estimation by management. Differences between amortization expense determined using the new estimates and any amounts previously expensed during that current fiscal year are charged or credited to the statement of operations in the period in which the estimates are revised. Deferred Revenue Payments received in advance of being earned are recorded as deferred revenue. Included in accounts payable and accrued liabilities as of December 31, 2015 and March 31, 2016, are $3.1 million and $2.5 million, respectively, of deferred revenue. Further, $6.0 million and $8.5 million, respectively, are included in the long-term portion of accrued liabilities as of December 31, 2015 and March 31, 2016. Transaction Costs The 2015 Term Loan transaction costs are being amortized using the effective interest method. The 2015 Revolver transaction costs are being amortized on a straight line basis over the term. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures , provides guidance which defines fair value, establishes a framework for measuring fair value and specifies disclosures about fair value measurements. The Company determines fair value as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company has balance sheet items (the derivative liability and other comprehensive loss) measured at fair value on a recurring basis related to its interest rate swap. Significant balance sheet items which are subject to non-recurring fair value measurements consist of impairment valuations of goodwill, promotion and placement fees, property and equipment, and owned programming and barter advertising revenue and programming. Derivative Instrument and Hedging Activities The Company records derivative financial instruments on the unaudited condensed consolidated balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Changes in fair value of derivative financial instruments that are designated and qualify as cash flow hedges are reflected in other comprehensive earnings. Changes in fair value that are deemed ineffective relative to the hedged risk are recorded in earnings as they occur. Foreign Currency Translation Adjustments Foreign currency monetary items are stated in U.S. dollars, the Company’s functional currency, measured at exchange rates at the balance sheet date, with currency translation gains and losses recorded in income. No translation adjustment income was recorded for the three months ended March 31, 2015. Translation adjustment income of $183,000 has been recorded for the three months ended March 31, 2016. Net Income per Share Basic net income per share for each period is computed by dividing net income attributable to common stock by the weighted average number of common shares outstanding during the period. Diluted net income per share for each period is computed by dividing net income attributable to common stock by the weighted average number of common shares plus potentially dilutive common shares outstanding except whenever any such effect would be antidilutive. Concentration of Risk Financial instruments, which potentially subject Crown Media Holdings to a concentration of credit risk, consist primarily of cash, cash equivalents and accounts receivable. Generally, Crown Media Holdings does not require collateral to secure receivables. Crown Media Holdings has no significant off balance sheet financial instruments with risk of accounting losses. Five and three of the Company’s distributors individually accounted for more than 10% of the Company’s consolidated subscriber revenue and collectively accounted for 87% and 54% of the Company’s consolidated subscriber revenue during the three months ended March 31, 2015 and 2016, respectively. Two of the Company’s distributors individually accounted for approximately 15% or more of the Company’s consolidated subscribers and collectively accounted for 45% and 43% of the Company’s subscribers during each of the t hree months ended March 31, 2015 and 2016. The loss of one of these distributors could have a significant impact on the Company’s operations. Four and two of the Company’s programming content providers individually accounted for more than 10% of the Company’s total programming rights payable and collectively accounted for 67% and 48% of the consolidated programming rights payable as of March 31, 2015 and 2016, respectively. The loss of one of these program content providers could have a significant impact on the Company’s operations. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in ASC 605—Revenue Recognition and most industry specific guidance throughout the Codification. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier adoption is permitted for annual reporting periods beginning after December 15, 2016. The Company is in the process of assessing the impact of the adoption of accounting standards update ASU No. 2014-09 on its financial position and results of operations. In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification ("ASC") Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. The company is in the process of evaluating the effect that ASC 842 will have on its consolidated financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to the current period presentation.

Programming Rights

Programming Rights	3 Months Ended
	Mar. 31, 2016
Programming Rights
Programming Rights	3. Programming Rights Programming rights are comprised of the following: As of December 31, As of March 31, 2015 2016 (In thousands) Programming rights — non-affiliates Acquired programming Licensed for less than 12 years $ $ Original programming Licensed for less than 12 years Licensed for 12 years or longer Owned Programming rights— Hallmark Cards affiliates Licensed for less than 12 years Programming rights, at cost Accumulated amortization Programming rights available for broadcast Owned programming in development Programming rights, net $ $ In the regular course of evaluating the remaining usefulness of its various program rights, the Company may determine that certain rights may be of little future value. In such instances, the Company shortens the estimated remaining life of the asset, often to zero , thereby accelerating amortization of the remaining net book value. During both the three months ended March 31, 2015 and 2016, no such changes in estimates resulted in additional amortization of programming rights. At December 31, 2015 and March 31, 2016, $24.0 million and $22.2 million, respectively, of programming rights were included in prepaid programming rights in the accompanying unaudited condensed consolidated balance sheets. The various license periods associated with such amounts had not commenced as of the respective balance sheet dates. Programming rights payable are comprised of the following: As of December 31, As of March 31, 2015 2016 (In thousands) Programming rights payable — non-affiliates Acquired programming $ $ Original programming Programming rights payable — Hallmark Cards affiliates Total programming rights payable Less current maturities Long-term programming rights payable $ $

Debt

Debt	3 Months Ended
	Mar. 31, 2016
Debt
Debt	4. Debt 2015 Credit Facility On June 25, 2015, the Company entered into the 2015 Credit Agreement. The 2015 Credit Agreement provides for the 2015 Term Loan and the 2015 Revolver. The 2015 Credit Agreement also provides for the issuance of letters of credit and the provision of swingline loans under the 2015 Revolver, subject to a $15.0 million sublimit for letters of credit and a $5.0 million sublimit for swingline loans. The Company used $80.0 million of proceeds from the 2015 Term Loan to repay the 2011 Term Loan. On July 24, 2015, the Company funded the redemption of the Notes using the proceeds from the remaining $245.0 million under the 2015 Term Loan and $25.0 million under the 2015 Revolver along with cash on hand. The 2015 Credit Agreement provides for the 2015 Term Loan, a five year $325.0 million senior secured term loan, the 2015 Revolver, a five year $100.0 million senior secured revolver, and the issuance of letters of credit and the provision of swingline loans under the 2015 Revolver, subject to a $15.0 million sublimit for letters of credit and a $5.0 million sublimit for swingline loans. The Company’s subsidiaries (the “Guarantors”) have guaranteed the Company’s obligations under the 2015 Credit Agreement. The 2015 Credit Agreement is collateralized by a first priority interest in substantially all of the present and future assets of the Company and the Guarantors, other than their interests in the Hallmark trademarks and associated rights. The Company must elect Eurodollar or base rate loans prior to borrowing. Eurodollar loans will bear interest at the adjusted LIBO rate (with that rate not to be deemed to be below 0.00%) , plus an interest margin ranging from 1.50% to 2.25% , depending on the Company’s Consolidated Leverage Ratio (as defined in the 2015 Credit Agreement). All base rate loans will bear interest at the alternate base rate (as defined in the 2015 Credit Agreement), plus an interest margin ranging from 0.50% to 1.25% , depending on the Company’s Consolidated Leverage Ratio. The adjusted LIBO rate is based on the three month LIBOR. Commitment fees are payable on the unused credit commitment at a rate ranging from 0.25% to 0.40% , depending on the Company’s Consolidated Leverage Ratio. The Company is required to make prepayments under the 2015 Term Loan in amounts equal to (1) 50% of excess cash flow, as defined in the 2015 Credit Agreement, of the Company for the six months ending December 31, 2015, and for each year thereafter, which percentage will be reduced to 25% if the Consolidated Leverage Ratio is equal to or less than 3.00 to 1.00 but greater than 2.00 to 1.00, and 0% if the Consolidated Leverage Ratio is equal to or less than 2.00 to 1; (2) 100% of net cash proceeds of dispositions or casualty events if the Company has not invested such proceeds within one year after the occurrence of the disposition or casualty event; and (3) 100% of net cash proceeds from the issuance of indebtedness not otherwise permitted by the 2015 Credit Agreement. The covenants in the 2015 Credit Agreement limit the ability of the Company and certain of its subsidiaries to, among other things: (1) incur indebtedness; (2) create or permit liens on assets; (3) pay certain dividends or make certain stock repurchases and redemptions and other restricted payments; (4) make certain investments; (5) prepay indebtedness; (6) enter into certain transactions with its affiliates; (7) dispose of assets; (8) merge or consolidate; (9) enter into new unrelated lines of business; and (10) enter into sale and leaseback transactions. The 2015 Credit Agreement also requires compliance by the Company with a Consolidated Leverage Ratio test and a Consolidated Secured Leverage Ratio test (as defined in the 2015 Credit Agreement). The Company was in compliance with its covenants under the 2015 Credit Agreement as of March 31, 2016. At December 31, 2015, the outstanding balance under the 2015 Term Loan, net of unamortized transaction costs of $2.6 million, was $322.4 million. At March 31, 2016, the outstanding balance under the 2015 Term Loan, net of unamortized transaction costs of $2.4 million, was $322.6 million. The Company made an interest payment of $1.8 million under the 2015 Term Loan during the three months ended March 31, 2016. Interest expense under the 2015 Term Loan was $2.1 million for the three months ended March 31, 2016. The effective interest rate was approximately 2.63% during the three months ended March 31, 2016. The weighted average nominal interest rate was approximately 2.34 % during the three months ended March 31, 2016. The 2015 Revolver was not in place during the three months ended March 31, 2015. Commitment fee expense for the three month periods ended March 31, 2016, was $75,000 . At both December 31, 2015 and March 31, 2016, one letter of credit in the amount of $909,000 was outstanding. 2011 Credit Facility Pursuant to the 2011 Credit Agreement, the Company entered into the 2011 Term Loan and the 2011 Revolver. The Company made principal payments of $20.0 million under the 2011 Term Loan during the three months ended March 31, 2015. Interest expense under the 2011 Term Loan was $1.5 million for the three months ended March 31, 2015. The effective interest rate was approximately 5.25% during the three months ended March 31, 2015. The weighted average nominal interest rate was approximately 4.05% during the three months ended March 31, 2015. Interest expense under the 2011 Revolver for the three months ended March 31, 2015 was $0 . Commitment fees on the 2011 Revolver were payable on the unused revolving credit commitment at the rate of 0.50% per annum, payable quarterly. Commitment fee expense for the three-month period ended March 31, 2015, was $37,000 . The Notes Interest expense under the Notes was $7.3 million for the three months ended March 31, 2015. After giving effect to the amortization of associated debt issuance costs, the effective interest rate of the Notes was approximately 11.0% during the three months ended March 31, 2015. Debt Service Requirements Debt service requirements, including estimated future interest and premium, for each of the five years subsequent to March 31, 2016 and the period thereafter, are as follows: Payments Due by Period Total Year 1 Year 2 Year 3 Year 4 Year 5 (In thousands) Term Loan, due June 25, 2020 $ $ $ $ $ $ Guarantees Because Crown Media Holdings has no independent assets or operations , the guarantees by the Guarantors under the 2015 Credit Agreement are full and unconditional, as well as joint and several. All subsidiaries of Crown Media Holdings are Guarantors. The 2015 Credit Agreement imposes restrictions on the payment of dividends by Crown Media Holdings and the Guarantors.

Derivatives Instrument and Hedg

Derivatives Instrument and Hedging Activities	3 Months Ended
	Mar. 31, 2016
Derivatives Instrument and Hedging Activities
Derivatives Instrument and Hedging Activities	5. Derivatives Instrument and Hedging Activities Interest Rate Swap Agreement As of both December 31, 2015 and March 31, 2016, the Company has one traditional interest rate swap agreement. The interest rate swap agreement has a notional amount of $200.0 million, matures on June 25, 2020, requires the Company to pay a fixed rate of interest of 1.6775% per annum, a swap counterparty pays the Company a variable rate of interest based upon the three month LIBOR, and has interest settlement dates occurring on the 25 th of January, April, July, and October through maturity to coincide with the interest payment dates of the 2015 Term Loan. The Company designated the interest rate swap agreement as a qualifying cash flow hedge. The Company did not have any settlements for the three months ended March 31, 2015. The Company paid interest under the swap agreement of $658,000 during the three months ended March 31, 2016. Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from the payment of future uncertain cash amounts, which are determined by interest rates. The Company’s derivative financial instrument is used to manage differences in the amount of the Company’s expected cash payments related to the Company’s borrowings. The Company does not speculate using derivative instruments. As of both December 31, 2015 and 2016, the Company did not have any derivatives outstanding that were not designated in hedge accounting relationships. During the next twelve months, the Company estimates that $ 1.5 million will be reclassified to interest expense. This interest expense will also impact income tax expense. Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the unaudited condensed consolidated balance sheet as of December 31, 2015 and March 31, 2016: As of December 31, 2015 As of March 31, 2016 Derivative Liability Derivative Liability Balance Sheet Location Fair Value (in thousands) Balance Sheet Location Fair Value (in thousands) Interest rate swap designated as a hedging instrument Derivative Payable $ Derivative Payable $ The unrealized loss on derivatives is recorded net of a tax benefit of $93,000 for the year ended December 31, 2015 and $1.7 million for the three months ended March 31, 2016. Credit Risk-Related Contingent Features The Company has an agreement with its derivative counterparty that contains a provision pursuant to which defaults by the Company, including defaults where repayment of the indebtedness has not been accelerated by the lender, could also be declared as defaults under the Company’s derivative obligations. As of December 31, 2015, and March 31, 2016, the termination value of derivative in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to this agreement was $735,000 and $5.1 million, respectively. As of December 31, 2015 and March 31, 2016, the Company has posted no collateral related to this agreement. If the Company had breached any of these provisions at December 31, 2015 and March 31, 2016, it could have been required to settle its obligation under the agreement at its termination value of $735,000 and $5.1 million , respectively . Changes in Accumulated Other Comprehensive Loss The following table reflects the changes in accumulated other comprehensive loss for the year ended December 31, 2015 and the three months ended March 31, 2016, net of tax: (Losses) Gains on Cash Flow Hedges (In thousands) Accumulated other comprehensive loss: Balance at December 31, 2014 $ — Other comprehensive loss before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax Unrealized loss on derivatives, net of tax, balance at December 31, 2015 Other comprehensive loss before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax Unrealized loss on derivatives, net of tax Balance at March 31, 2016 $

Fair Value

Fair Value	3 Months Ended
	Mar. 31, 2016
Fair Value.
Fair Value	6. Fair Value The following table presents the carrying amounts (including interest) and estimated fair values (including interest) of the Company’s financial instruments at December 31, 2015 and March 31, 2016. December 31, 2015 March 31, 2016 Carrying Fair Carrying Fair Amount Value Amount Value (In thousands) Interest rate swap (Level 2) $ $ $ $ 2015 Term Loan and interest payable (Level 3) ASC Topic 820 Fair Value Measurements and Disclosures defines fair value of a liability as the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company estimated the fair value of the interest rate swap using the trading prices obtained from Bloomberg on December 31, 2015 and March 31, 2016, a Level 2 input. The Company estimated the fair value of its 2015 Term Loan using a yield-to-maturity rate obtained from a pricing service, a Level 3 input. At December 31, 2015 and March 31, 2016, the fair values of the Level 3 financial instruments were $325.5 million and $326.5 million, respectively. No transfers between levels occurred during 2015 and 2016. Accounts payable and accrued liabilities and receivables are carried at reasonable estimates of their fair values because of the short-term nature of these instruments. Interest rates on borrowings under the revolvers are for relatively short periods and variable. Therefore, the fair value of this debt is not significantly affected by fluctuations in interest rates. The credit spread on the debt is fixed, but the market rate will fluctuate. Only a significant change in the creditworthiness of the Company would impact the credit spread. The Company believes that there has not been a significant change in this regard since issuance.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2016
Related Party Transactions
Related Party Transactions	7. Related Party Transactions State Tax Sharing Agreements For the tax year ended December 31, 2015, it is estimated that the Company will owe Hallmark Cards approximately $358,000 with respect to the state tax sharing agreement, which will be paid during 2016 two days prior to the due date of the state tax returns. At March 31, 2016, it is estimated that the Company will owe Hallmark Cards approximately $221,000 with respect to a state tax sharing agreement for the three months ended March 31, 2016, which will be paid during 2017 two days prior to the due date of the state tax return. The state tax sharing agreement will continue as long as the Company is included in Hallmark Cards’ consolidated or combined returns. The Company expects it will continue to be included in Hallmark Cards’ consolidated or combined returns for certain states. Canadian Funds During 2015, Hallmark Cards paid $6.7 million of Canadian film costs on our behalf which we reimbursed during the same period. Additionally, we purchased $8.8 million of Canadian dollars from Hallmark Cards during 2015 at market rates. During the three months ended March 31, 2015, Hallmark Cards paid $3.8 million of Canadian film costs on our behalf which we reimbursed. During the three months ended March 31, 2016, we purchased $3.6 million of Canadian dollars from Hallmark Cards at market rates. Services Agreement with Hallmark Cards Hallmark Cards provides Crown Media Holdings with tax, risk management, health, safety, environmental, insurance, legal, treasury, human resources, cash management and real estate consulting services. In exchange, the Company is obligated to pay Hallmark Cards a fee, plus out-of-pocket expenses and third party fees, in arrears on the last business day of each month. Fees for Hallmark Cards’ services were $389,000 for 2015 and are expected to be $426,000 for 2016. At December 31, 2015 and March 31, 2016, the Company’s payables to Hallmark Cards affiliates in the accompanying consolidated balance sheets were $353,000 and $658,000, respectively. The December 31, 2015 balance was comprised of $346,000 of taxes and $7,000 of invoices paid on the Company’s behalf. The March 31, 2016 balance was comprised of taxes. “Hallmark Hall of Fame” Programming License Agreement In 2008, Crown Media United States entered into an agreement with Hallmark Hall of Fame Productions, LLC for the exclusive television license of 58 “Hallmark Hall of Fame” movies, consisting of 16 contemporary Hallmark Hall of Fame titles ( i.e ., produced from 2003 to 2008) and 42 older titles, for exhibition on Hallmark Channel and Hallmark Movies and Mysteries. These titles are licensed for ten year windows, which commenced at various times between 2007 and 2010. The total license fee for these movies is $17.2 million and is payable in equal monthly installments over the various ten -year exhibition windows. In 2011, Crown Media United States entered into an additional agreement with Hallmark Hall of Fame Productions, LLC for the exclusive television license of 16 “Hallmark Hall of Fame” movies produced from 2009 through 2014, for exhibition on Hallmark Channel and Hallmark Movies and Mysteries. These titles are licensed for ten -year windows, with windows commencing at various times between 2011 and 2014, depending on availability. The total license fee for these movies is $10.0 million and is payable in equal monthly installments over the various ten -year exhibition windows. Effective October 1, 2014, Crown Media United States entered into an additional agreement with Hallmark Hall of Fame Productions, LLC for the exclusive television license of “Hallmark Hall of Fame” movies produced from 2014 through 2016, for exhibition on Hallmark Channel and Hallmark Movies and Mysteries. These titles are licensed for ten -year windows, with windows commencing at times as agreed to by the parties. The license fee for these movies is $660,000 per movie and is payable in equal yearly installments over the license term. Effective September 12, 2014, the Company entered into an agreement with Hallmark Cards whereby Hallmark Cards has purchased advertising time from the Company and has provided exclusive premier rights to the two new “Hallmark Hall of Fame” two -hour movies. Additionally, the Company had exclusive rights to broadcast two “Hallmark Hall of Fame” two -hour movies, which had premiered in a previous year. The Company has received $3.0 million under this agreement in connection with Hallmark Cards’ advertising on Hallmark Channel. The Company recognized advertising revenue of approximately $3.8 million as it fulfilled its advertising obligations to Hallmark Cards over the life of the agreement. As of December 31, 2015, four of these movies have aired on Hallmark Channel. Effective July 28, 2015, the Company entered into a new agreement with Hallmark Cards, pursuant to which Hallmark Cards has agreed to provide exclusive premier rights to a new holiday Hallmark Hall of Fame two -hour movie and to purchase advertising time from the Company for $2.3 million. As of December 31, 2015, this movie has aired on Hallmark Channel. In February 2016, the Company entered into a new agreement with Hallmark Cards, pursuant to which the Company will become the producer and premier broadcaster of the Hallmark Hall of Fame television series. Hallmark Cards will continue to sponsor the series and will remain involved in the creative process, including approving scripts that build upon the series’ reputation for movies that entertain, enlighten and inspire. The Company would be obligated to produce two movies per year, one for Christmas and one for Valentine’s Day. Northpole Licensing Agreements The Company has produced Northpole , a Hallmark Channel original holiday movie, which premiered during the 2014 holiday season. It was the first full-length, two -hour original holiday movie by Hallmark Channel based on Hallmark Cards’ intellectual property. The Company has produced Northpole: Open for Christmas , a Hallmark Channel original holiday movie, which premiered during the 2015 holiday season. It is the second full-length, two -hour original holiday movie produced by Hallmark Channel based on Hallmark Cards’ intellectual property. Sublease Agreement During the first quarter of 2016, the Company entered into a sublease agreement with Hallmark Cards for additional Studio City, California, office space. The lease will commence on May 1, 2016 and terminate on January 31, 2017. Future minimum lease payments under the agreement are $102,000 for 5,681 square feet. Trademark Agreement with Hallmark Cards Crown Media United States has a trademark license agreement with Hallmark Licensing, LLC (f/k/a Hallmark Licensing, Inc., “Hallmark Licensing”), an affiliate of Hallmark Cards, for use of the “Hallmark” mark for Hallmark Channel and for Hallmark Movies and Mysteries. The agreement terminates upon the earlier of (i) June 30, 2021 or (ii) the payment in full of all obligations, and terminations of all commitments, under the 2015 Credit Agreement. The Company is not required to pay any royalty fees under the trademark license agreement. Accordingly, no amounts have been reflected in the accompanying consolidated balance sheets or consolidated statements of operations and comprehensive income (loss) of the Company for these licenses. Under the license agreement, the Company would be in default if it (i) distributed any programming which fails to comply with the standards outlined, or fails to comply with any other term of the agreement and does not cure such failure within 10 days of notice, (ii) fails to make any payment due under any loan agreement within five days of its due date or (iii) receives an opinion from its auditors that expresses their doubt with respect to the Company’s ability to continue as a going concern, among others.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Taxes
Income Taxes	8. Income Taxes As a result of the Federal Tax Deconsolidation in 2012, the Company files a separate-company federal tax return. For 2013, 2014 and 2015, the Company generated federal and state taxable income for both regular tax and alternative minimum tax (“AMT”) purposes. For regular tax purposes, this income will be fully offset by net operating loss carryforwards. However, for federal AMT purposes, loss carryforwards used to offset the AMT income are subject to a 90% limitation. During the three months ended March 31, 2015 and 2016, the Company paid AMT of $61,000 and $0 , respectively. During the three months ended March 31, 2015 and 2016, the Company recognized AMT of $594,000 and $1.0 million, respectively, and these amounts are included as components of accrued liabilities on the accompanying unaudited condensed consolidated balance sheets. At December 31, 2015, the Company had federal NOLs of $305.0 million and various state NOLs. The Company maintains a $2.3 million valuation allowance against net deferred tax assets, which are comprised of state NOLs that the Company does not anticipate being able to realize. The federal NOLs will expire between 2020 and 2021, and the state NOLs will expire between 2016 and 2032. At both December 31, 2015, and March 31, 2016, the Company did not have any unrecognized tax benefits for uncertain tax positions. The Company recognized no increase or decrease in the amount of unrecognized tax benefits for uncertain tax positions. Accordingly, at both December 31, 2015, and March 31, 2016, there is no accrued interest related to uncertain tax positions. By virtue of its inclusion in Hallmark Cards consolidated tax returns, the Company is subject to examination by the Internal Revenue Service for periods subsequent to March 10, 2003, and prior to the Federal Tax Deconsolidation. The Internal Revenue Service audited the Hallmark Cards consolidated tax returns for 2010 through 2013. The separate tax returns of the Company from November 1 through December 31, 2012, 2013, 2014 through 2015 are also subject to examination by the Internal Revenue Service. Further, net operating loss carry forwards are subject to examination in the year they are utilized regardless of whether the tax year in which they were generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company is subject to examination for SRLY NOLs generated prior to March 11, 2003, as such NOLs are utilized.

Long Term Incentive Plan

Long Term Incentive Plan	3 Months Ended
	Mar. 31, 2016
Restricted Stock Units and Long Term Incentive Plan
Long Term Incentive Plan	9. Long Term Incentive Plan Employee The Company grants incentive awards pursuant to the 2012 Long Term Incentive Plan (the “2012 Plan”). For awards granted in 2012 through 2016, the target amount of an award granted was based on a percentage of each employee’s annual base salary ranging from 18% to 85% . Each award is comprised of a Performance Award and an Employment Award. For awards granted in 2013 through 2016, the Performance Award constituted 60% of the award and the Employment Award constituted 40% of the award. The Performance Award is based on the Company’s achievement of a predetermined cash flow goal (cash flow before interest, taxes and long term incentive expense, and debt repayments) and an adjusted EBITDA goal (earnings before interest and taxes) over a three year performance period. Each of the 40% Employment Awards are subject to continued employment and each of the 60% Performance Awards are subject to the Company’s achievement of financial performance criteria. Each award will be settled in cash and is subject to earlier pro rata settlement as provided in the 2012 Plan. Changes in the employee long term incentive plan account are as follows: Granted Incentive Settlement (in thousands) Compensation Range Vesting Date Employment Awards Performance Awards Grant Date Low Grant High Grant Employment Awards Performance Awards Date Amount Date Amount 3/1/2012 8/31/2014 12/31/2014 9/5/2014 3/6/2015 3/1/2013 12/31/2015 12/31/2015 2/26/2016 2/26/2016 3/1/2014 12/31/2016 12/31/2016 N/A — N/A — 3/1/2015 12/31/2017 12/31/2017 N/A — N/A — 3/1/2016 12/31/2018 12/31/2018 N/A — N/A — Independent Directors The Company entered into agreements (“LTI Agreements”) granting incentive compensation to each director who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the Company’s board and achievement of the financial performance criteria. Each award will be settled in cash and is subject to earlier pro rata settlement as provided in each LTI Agreement. Changes in the independent director long term incentive plan account are as follows: Settlement Grant Date Grant Amount Vesting Date Date Amount 8/17/2012 $ 12/31/2014 3/4/2015 $ 3/1/2013 12/31/2015 2/26/2016 3/1/2014 12/31/2016 N/A — 3/1/2015 12/31/2017 N/A — 3/1/2016 12/31/2018 N/A — Vesting Vesting of the 2013, 2014, 2015 and 2016 performance awards under the LTI Agreements will be determined in accordance with the Company’s performance criteria concerning adjusted EBITDA and cash flow and subject to earlier pro rata settlement as provided in each LTI Agreement. In recognition of these LTI Agreements, the accompanying unaudited condensed consolidated statements of operations and comprehensive income (loss) include $872,000 million and $1.4 million among selling, general and administrative expense for the three months ended March 31, 2015 and 2016, respectively. Additionally, the $8.2 million and $5.5 million liabilities for these agreements were included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets at December 31, 2015, and March 31, 2016, respectively.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies
Commitments and Contingencies	10. Commitments and Contingencies In the normal course of business, the Company has entered into agreements that commit it to make cash payments in future periods with respect to non-cancelable leases and programming contracts. Legal Proceedings From time to time, the Company and/or various officers and directors may be named as defendants in legal actions involving various claims incident to the conduct of its business. Whenever the Company concludes that an adverse outcome in any such action is probable and a loss amount can reasonably be estimated, the Company records such loss amount. Related legal costs, net of anticipated insurance reimbursements, are expensed as incurred.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2016
Subsequent Events.
Subsequent Events	11. Subsequent Events On May 2, 2016, Hallmark Cards completed a short-form merger of Crown Media Holdings with CM Merger Co., an indirect wholly-owned subsidiary of Hallmark Cards, pursuant to Section 253 of the Delaware General Corporation Law. Following the Merger, the Company became a wholly-owned indirect subsidiary of Hallmark Cards. Trading on The Nasdaq Stock Market has been suspended and the Company is being delisted from The Nasdaq Stock Market and deregistered with the Securities and Exchange Commission.

Summary of Significant Accoun17

Summary of Significant Accounting Policies and Estimates (Policies)	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies and Estimates
Interim Financial Statements	Interim Financial Statements In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related interim unaudited condensed consolidated statements of operations and comprehensive income (loss) and cash flows include all adjustments, consisting of normal recurring items necessary for their fair presentation in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Crown Media Holdings and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in accordance with GAAP requires the consideration of events or transactions that occur after the balance sheet date but before the financial statements are issued. Depending on the nature of the subsequent event, financial statement recognition or disclosure of the subsequent event may be required.
Use of Estimates	Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. Such estimates include the collectibility of accounts receivable, the valuation of goodwill, intangible assets and other long-lived assets, the net realizable value of programming rights, the fair value of film assets, legal contingencies, indemnifications, barter transactions, and assumptions used in the calculation of income taxes and related valuation allowance, among others. All of the estimates that are employed are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts The allowance for doubtful accounts is based upon the Company’s assessment of probable loss related to uncollectible accounts receivable. The Company uses a number of factors in determining the allowance, including, among other things, the financial condition of specific customers and collection trends. The Company’s bad debt expense was $130,000 and $963,000 for the three months ended March 31, 2015 and 2016, respectively.
Barter Transactions	Barter Transactions The Company enters into transactions that involve the exchange of its on air advertising spots, in part, for other products and services, such as programming rights. Programming rights and the related deferred advertising revenue that result from such transactions are recognized at the estimated fair value of the advertising spots conveyed when the programming is available for telecast. Barter programming rights are amortized in the same manner as non-barter programming rights and advertising revenue is recognized when delivered. The Company recognized $982,000 and $727,000 in barter advertising revenue during the three months ended March 31, 2015 and 2016, respectively. The Company recognized $881,000 and $631,000 in barter expense included in programming costs on the unaudited condensed consolidated statements of operations and comprehensive income (loss) during the three months ended March 31, 2015 and 2016, respectively.
Film Assets Included in Long Term Programming Rights	Film Assets Included in Long-Term Programming Rights The Company amortizes its film assets using the individual-film-forecast-computation method. The individual-film-forecast-computation method amortizes such assets in the same ratio that current period actual revenue bears to estimated ultimate future revenues. On a quarterly basis, the Company assesses whether events or circumstances have changed indicating that the fair value of a film is lower than its unamortized cost or carrying value. If the carrying value of any individual film asset exceeds its fair value, the film asset is written-down to its estimated fair value. The Company reviews its estimates of ultimate future revenues and participation costs as of each reporting date to reflect currently available information. Estimated ultimate future revenues are based on sales plans and other factors, all of which require significant judgment and estimation by management. Differences between amortization expense determined using the new estimates and any amounts previously expensed during that current fiscal year are charged or credited to the statement of operations in the period in which the estimates are revised.
Deferred Revenue	Deferred Revenue Payments received in advance of being earned are recorded as deferred revenue. Included in accounts payable and accrued liabilities as of December 31, 2015 and March 31, 2016, are $3.1 million and $2.5 million, respectively, of deferred revenue. Further, $6.0 million and $8.5 million, respectively, are included in the long-term portion of accrued liabilities as of December 31, 2015 and March 31, 2016.
Transaction Costs	Transaction Costs The 2015 Term Loan transaction costs are being amortized using the effective interest method. The 2015 Revolver transaction costs are being amortized on a straight line basis over the term.
Fair Value of Financial Instruments	Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements and Disclosures , provides guidance which defines fair value, establishes a framework for measuring fair value and specifies disclosures about fair value measurements. The Company determines fair value as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company has balance sheet items (the derivative liability and other comprehensive loss) measured at fair value on a recurring basis related to its interest rate swap. Significant balance sheet items which are subject to non-recurring fair value measurements consist of impairment valuations of goodwill, promotion and placement fees, property and equipment, and owned programming and barter advertising revenue and programming.
Derivative Instrument and Hedging Activities	Derivative Instrument and Hedging Activities The Company records derivative financial instruments on the unaudited condensed consolidated balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Changes in fair value of derivative financial instruments that are designated and qualify as cash flow hedges are reflected in other comprehensive earnings. Changes in fair value that are deemed ineffective relative to the hedged risk are recorded in earnings as they occur.
Foreign Currency Translation Adjustment	Foreign Currency Translation Adjustments Foreign currency monetary items are stated in U.S. dollars, the Company’s functional currency, measured at exchange rates at the balance sheet date, with currency translation gains and losses recorded in income. No translation adjustment income was recorded for the three months ended March 31, 2015. Translation adjustment income of $183,000 has been recorded for the three months ended March 31, 2016.
Net Income per Share	Net Income per Share Basic net income per share for each period is computed by dividing net income attributable to common stock by the weighted average number of common shares outstanding during the period. Diluted net income per share for each period is computed by dividing net income attributable to common stock by the weighted average number of common shares plus potentially dilutive common shares outstanding except whenever any such effect would be antidilutive.
Concentration of Risk	Concentration of Risk Financial instruments, which potentially subject Crown Media Holdings to a concentration of credit risk, consist primarily of cash, cash equivalents and accounts receivable. Generally, Crown Media Holdings does not require collateral to secure receivables. Crown Media Holdings has no significant off balance sheet financial instruments with risk of accounting losses. Five and three of the Company’s distributors individually accounted for more than 10% of the Company’s consolidated subscriber revenue and collectively accounted for 87% and 54% of the Company’s consolidated subscriber revenue during the three months ended March 31, 2015 and 2016, respectively. Two of the Company’s distributors individually accounted for approximately 15% or more of the Company’s consolidated subscribers and collectively accounted for 45% and 43% of the Company’s subscribers during each of the t hree months ended March 31, 2015 and 2016. The loss of one of these distributors could have a significant impact on the Company’s operations. Four and two of the Company’s programming content providers individually accounted for more than 10% of the Company’s total programming rights payable and collectively accounted for 67% and 48% of the consolidated programming rights payable as of March 31, 2015 and 2016, respectively. The loss of one of these program content providers could have a significant impact on the Company’s operations.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in ASC 605—Revenue Recognition and most industry specific guidance throughout the Codification. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier adoption is permitted for annual reporting periods beginning after December 15, 2016. The Company is in the process of assessing the impact of the adoption of accounting standards update ASU No. 2014-09 on its financial position and results of operations. In February 2016, the FASB issued its final lease accounting standard, FASB Accounting Standard Codification ("ASC") Topic 842, Leases, which requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for fiscal years beginning after December 15, 2018. Early adoption is permitted. The company is in the process of evaluating the effect that ASC 842 will have on its consolidated financial statements and related disclosures. The standard is to be applied under the modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.
Reclassifications	Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to the current period presentation.

Programming Rights (Tables)

Programming Rights (Tables)	3 Months Ended
	Mar. 31, 2016
Programming Rights
Schedule of programming rights	As of December 31, As of March 31, 2015 2016 (In thousands) Programming rights — non-affiliates Acquired programming Licensed for less than 12 years $ $ Original programming Licensed for less than 12 years Licensed for 12 years or longer Owned Programming rights— Hallmark Cards affiliates Licensed for less than 12 years Programming rights, at cost Accumulated amortization Programming rights available for broadcast Owned programming in development Programming rights, net $ $
Schedule of programming rights payable	As of December 31, As of March 31, 2015 2016 (In thousands) Programming rights payable — non-affiliates Acquired programming $ $ Original programming Programming rights payable — Hallmark Cards affiliates Total programming rights payable Less current maturities Long-term programming rights payable $ $

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2016
Debt
Schedule of debt service requirements, including estimated future interest, for each of the five years	Payments Due by Period Total Year 1 Year 2 Year 3 Year 4 Year 5 (In thousands) Term Loan, due June 25, 2020 $ $ $ $ $ $

Derivatives Instrument and He20

Derivatives Instrument and Hedging Activities (Tables)	3 Months Ended
	Mar. 31, 2016
Derivatives Instrument and Hedging Activities
Schedule of fair value of the derivative financial instrument as well as its classification on the unaudited condensed consolidated balance sheet	As of December 31, 2015 As of March 31, 2016 Derivative Liability Derivative Liability Balance Sheet Location Fair Value (in thousands) Balance Sheet Location Fair Value (in thousands) Interest rate swap designated as a hedging instrument Derivative Payable $ Derivative Payable $
Schedule of changes in accumulated other comprehensive loss	(Losses) Gains on Cash Flow Hedges (In thousands) Accumulated other comprehensive loss: Balance at December 31, 2014 $ — Other comprehensive loss before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax Unrealized loss on derivatives, net of tax, balance at December 31, 2015 Other comprehensive loss before reclassifications, net of tax Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax Unrealized loss on derivatives, net of tax Balance at March 31, 2016 $

Fair Value (Tables)

Fair Value (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value.
Schedule of the carrying amounts and estimated fair values of the company's financial instruments	December 31, 2015 March 31, 2016 Carrying Fair Carrying Fair Amount Value Amount Value (In thousands) Interest rate swap (Level 2) $ $ $ $ 2015 Term Loan and interest payable (Level 3)

Long Term Incentive Plan (Table

Long Term Incentive Plan (Tables) - LTI Agreements	3 Months Ended
	Mar. 31, 2016
Schedule of changes in the long term incentive plan account	Granted Incentive Settlement (in thousands) Compensation Range Vesting Date Employment Awards Performance Awards Grant Date Low Grant High Grant Employment Awards Performance Awards Date Amount Date Amount 3/1/2012 8/31/2014 12/31/2014 9/5/2014 3/6/2015 3/1/2013 12/31/2015 12/31/2015 2/26/2016 2/26/2016 3/1/2014 12/31/2016 12/31/2016 N/A — N/A — 3/1/2015 12/31/2017 12/31/2017 N/A — N/A — 3/1/2016 12/31/2018 12/31/2018 N/A — N/A —
Independent director
Schedule of changes in the long term incentive plan account	Settlement Grant Date Grant Amount Vesting Date Date Amount 8/17/2012 $ 12/31/2014 3/4/2015 $ 3/1/2013 12/31/2015 2/26/2016 3/1/2014 12/31/2016 N/A — 3/1/2015 12/31/2017 N/A — 3/1/2016 12/31/2018 N/A —

Business and Organization (Deta

Business and Organization (Details)	3 Months Ended
	Mar. 31, 2016item
Business and Organization.
Number of operating segments	1

Summary of Significant Accoun24

Summary of Significant Accounting Policies and Estimates (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Summary of Significant Accounting Policies and Estimates
Allowance for doubtful accounts	$ 963,000	$ 130,000
Barter Transactions
Barter advertising revenue	727,000	982,000
Barter expense	631,000	881,000
Revenue Recognition
Deferred revenue, current	2,500,000		$ 3,100,000
Deferred revenue, long term portion	8,500,000		$ 6,000,000
Foreign Currency Translation Adjustment
Translation adjustment expense	$ 183,000	$ 0

Summary of Significant Accoun25

Summary of Significant Accounting Policies and Estimates (ConRisk) (Details) - item	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Subscriber revenue | Distributors concentration
Concentration of Risk
Concentration of risk (as a percent)	54.00%	87.00%
Number of major distributors	3	5
Threshold for concentration of risk (as a percent)	10.00%	10.00%
Hallmark Channel subscribers | Distributors concentration
Concentration of Risk
Concentration of risk (as a percent)	43.00%	45.00%
Number of major distributors	2	2
Threshold for concentration of risk (as a percent)	15.00%	15.00%
Programming rights | Programming content providers concentration
Concentration of Risk
Concentration of risk (as a percent)	48.00%	67.00%
Number of programming content providers	2	4
Threshold for concentration of risk (as a percent)	10.00%	10.00%

Programming Rights (Details)

Programming Rights (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Programming Rights
Programming rights, at cost	$ 824,785,000		$ 773,370,000
Accumulated amortization	(435,398,000)		(398,582,000)
Programming rights available for broadcast	389,387,000		374,788,000
Owned programming in development	5,457,000		5,228,000
Programming rights, net	$ 394,844,000		380,016,000
Shortened estimated remaining life of programming rights	0 years
Additional amortization of programming rights	$ 0	$ 0
Programming rights, included in prepaid programming rights	22,200,000		24,000,000
Programming rights payable
Total programming rights payable	129,947,000		122,563,000
Less current maturities	(71,260,000)		(73,654,000)
Long-term programming rights payable	58,687,000		48,909,000
Hallmark Cards affiliates
Programming Rights
Licensed	28,334,000		28,334,000
Programming rights payable
Total programming rights payable	12,954,000		13,643,000
Non-Affiliates | Acquired programming
Programming Rights
Acquired programming licensed for less than 12 years	317,248,000		292,990,000
Programming rights payable
Total programming rights payable	105,071,000		94,201,000
Non-Affiliates | Original programming
Programming Rights
Original programming licensed for less than 12 years	249,668,000		250,189,000
Original programming licensed for 12 years or longer	136,547,000		118,717,000
Owned	92,988,000		83,140,000
Programming rights payable
Total programming rights payable	$ 11,922,000		$ 14,719,000

Debt (Details)

Debt (Details) - USD ($)	Jul. 24, 2015	Jun. 25, 2015	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Credit Facility and Term Loan
Debt transaction costs, net			$ 760,000		$ 805,000
Interest paid			$ 2,679,000	$ 15,815,000
2015 Credit Facility | LIBOR
Credit Facility and Term Loan
LIBOR floor (as a percent)			0.00%
2015 Credit Facility | Minimum
Credit Facility and Term Loan
Commitment fees on unused revolving credit commitment (as a percent)			0.25%
2015 Credit Facility | Minimum | LIBOR
Credit Facility and Term Loan
Variable applicable rate (as a percent)			1.50%
2015 Credit Facility | Minimum | Base Rate
Credit Facility and Term Loan
Variable applicable rate (as a percent)			0.50%
2015 Credit Facility | Maximum
Credit Facility and Term Loan
Commitment fees on unused revolving credit commitment (as a percent)			0.40%
2015 Credit Facility | Maximum | LIBOR
Credit Facility and Term Loan
Variable applicable rate (as a percent)			2.25%
2015 Credit Facility | Maximum | Base Rate
Credit Facility and Term Loan
Variable applicable rate (as a percent)			1.25%
Revolving credit facility | 2015 Credit Facility
Credit Facility and Term Loan
Maximum borrowing capacity		$ 5,000,000	$ 5,000,000
Proceeds from line of credit	$ 25,000,000
Term of debt instrument			5 years
Principal of debt			$ 100,000,000
Commitment fee expense			$ 75,000
Revolving credit facility | 2011 Credit Facility
Credit Facility and Term Loan
Commitment fees on unused revolving credit commitment (as a percent)				0.50%
Interest expense				$ 0
Commitment fee expense				37,000
Senior secured term loan facility | 2015 Credit Facility
Credit Facility and Term Loan
Principal payment on debt		80,000,000
Amount borrowed	$ 245,000,000
Term of debt instrument			5 years
Principal of debt			$ 325,000,000
Additional principal payments required as a percentage of excess cash flow			50.00%
Additional principal payments required as a percentage of net cash proceeds of dispositions or casualty events, if not invested within one year			100.00%
Period of time within which proceeds must be reinvested			1 year
Additional principal payments required as a percentage of net cash proceeds from issuance of debt or Preferred Stock			100.00%
Debt transaction costs, net			$ 2,400,000		2,600,000
Interest paid			1,800,000
Interest expense			$ 2,100,000
Effective interest rate (as a percent)			2.63%
Weighted average nominal interest rate (as a percent)			2.34%
Outstanding balance under the Term Loan, net of unamortized transaction costs			$ 322,600,000		322,400,000
Senior secured term loan facility | 2015 Credit Facility | Consolidated leverage ratio, equal to or less than 3.00 to 1.00 but greater than 2.00 to 1.00
Credit Facility and Term Loan
Additional principal payments required as a percentage of excess cash flow			25.00%
Senior secured term loan facility | 2015 Credit Facility | Consolidated leverage ratio, equal to or less than 3.00 to 1.00 but greater than 2.00 to 1.00 | Minimum
Credit Facility and Term Loan
Consolidated leverage ratio			2
Senior secured term loan facility | 2015 Credit Facility | Consolidated leverage ratio, equal to or less than 3.00 to 1.00 but greater than 2.00 to 1.00 | Maximum
Credit Facility and Term Loan
Consolidated leverage ratio			3
Senior secured term loan facility | 2015 Credit Facility | Consolidated leverage ratio, equal to or less than 2.00 to 1.00
Credit Facility and Term Loan
Additional principal payments required as a percentage of excess cash flow			0.00%
Senior secured term loan facility | 2015 Credit Facility | Consolidated leverage ratio, equal to or less than 2.00 to 1.00 | Maximum
Credit Facility and Term Loan
Consolidated leverage ratio			2
Senior secured term loan facility | 2011 Credit Facility
Credit Facility and Term Loan
Principal payment on debt				20,000,000
Interest expense				$ 1,500,000
Effective interest rate (as a percent)				5.25%
Weighted average nominal interest rate (as a percent)				4.05%
Letter of Credit | 2015 Credit Facility
Credit Facility and Term Loan
Maximum borrowing capacity		$ 15,000,000	$ 15,000,000
Amount of letter of credit outstanding			$ 909,000		$ 909,000
Notes
Credit Facility and Term Loan
Interest expense				$ 7,300,000
Effective interest rate (as a percent)				11.00%

Debt (Maturities) (Details)

Debt (Maturities) (Details)	3 Months Ended
	Mar. 31, 2016USD ($)
Guarantees
Amount of independent assets	$ 0
Amount of independent operations	0
Revolving credit facility
Aggregate maturities of debt including future interest for each of the five years
Total	355,702,000
Year 1	23,982,000
Year 2	23,608,000
Year 3	31,295,000
Year 4	38,826,000
Year 5	$ 237,991,000

Derivatives Instrument and He29

Derivatives Instrument and Hedging Activities (Details)	3 Months Ended
	Mar. 31, 2016USD ($)item	Mar. 31, 2015USD ($)	Dec. 31, 2015item
Derivatives Instrument and Hedging Activities
Interest paid	$ 2,679,000	$ 15,815,000
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging
Derivatives Instrument and Hedging Activities
Number of agreements | item	1		1
Notional amount	$ 200,000,000
Fixed interest rate (as a percent)	1.6775%
Interest paid	$ 658,000
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | Interest expense.
Derivatives Instrument and Hedging Activities
Increase to interest expense	$ 1,500,000

Derivatives Instrument and He30

Derivatives Instrument and Hedging Activities (BalSheet) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Fair Value
Derivative liability	$ 5,145,000	$ 735,000
Tax benefit on unrealized loss on derivatives	5,100,000
Designated as Hedging Instrument | Interest Rate Swap
Fair Value
Derivative liability	5,145,000	735,000
Tax benefit on unrealized loss on derivatives	$ 1,700,000	$ 93,000

Derivatives Instrument and He31

Derivatives Instrument and Hedging Activities (CrRisk) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Credit Risk-Related Contingent Features
Termination value of derivative	$ 5,100	$ 735
Collateral posted related to the agreement	$ 0	$ 0

Derivatives Instrument and He32

Derivatives Instrument and Hedging Activities (AOCL) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Changes in accumulated other comprehensive loss
Balances	$ 579,563
Balances	607,875	$ 579,563
(Losses) Gains on Cash Flow Hedges
Changes in accumulated other comprehensive loss
Balances	(158)
Other comprehensive loss before reclassifications, net of tax	(3,212)	(808)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of tax	358	650
Unrealized loss on derivatives, net of tax	(2,854)	(158)
Balances	$ (3,012)	$ (158)

Fair Value (Details)

Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value
Transfers between levels	$ 0	$ 0
Level 3
Fair Value
Long-term debt and interest payable	326,500	325,500
2015 Term Loan and interest payable | Level 3 | Senior secured term loan facility | Carrying Amount
Fair Value
Long-term debt and interest payable	324,016	323,675
2015 Term Loan and interest payable | Level 3 | Senior secured term loan facility | Fair Value
Fair Value
Long-term debt and interest payable	326,462	325,500
Interest Rate Swap | Level 2 | Carrying Amount
Fair Value
Long-term debt and interest payable	5,145	735
Interest Rate Swap | Level 2 | Fair Value
Fair Value
Long-term debt and interest payable	$ 5,145	$ 735

Related Party Transactions (Det

Related Party Transactions (Details) CAD in Millions	3 Months Ended			12 Months Ended
	Mar. 31, 2016CAD	Mar. 31, 2016USD ($)	Mar. 31, 2015USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2015CAD	Dec. 31, 2015USD ($)
Related Party Transactions
Payables to Hallmark Cards and affiliates		$ 658,000				$ 353,000
Hallmark Cards
Related Party Transactions
Payment to Hallmark Cards			$ 3,800,000			6,700,000
Canadian dollars purchased from Hallmark Cards | CAD	CAD 3.6				CAD 8.8
Hallmark Cards | State tax sharing agreement
Related Party Transactions
Amount owed under tax sharing agreement		$ 221,000				$ 358,000
Period prior to due date of state tax returns when amount will be payable	2 days	2 days			2 days	2 days
Hallmark Cards | Services Agreement
Related Party Transactions
Fees for related party services						$ 389,000
Hallmark Cards | Services Agreement | Forecast
Related Party Transactions
Fees for related party services				$ 426,000
Hallmark Cards affiliates
Related Party Transactions
Payables to Hallmark Cards and affiliates		$ 658,000				353,000
Amount of taxes paid on behalf of the entity						346,000
Amount of invoice payment made on behalf of the entity						$ 7,000

Related Party Transactions (Pro

Related Party Transactions (Prog) (Details)	Feb. 29, 2016item	Oct. 01, 2014USD ($)	Sep. 12, 2014USD ($)item	Mar. 31, 2016USD ($)ft²	Mar. 31, 2015USD ($)	Dec. 31, 2011USD ($)item	Dec. 31, 2008USD ($)item	Dec. 31, 2015USD ($)item	Jul. 28, 2015USD ($)
Related Party Transactions
Advertising revenue recognized				$ 100,763,000	$ 78,378,000
Programming rights				289,412,000				$ 272,016,000
Trademark licenses
Related Party Transactions
Licenses amount reflected in the condensed consolidated balance sheets				$ 0
Period after which entity will be in default for not complying with the standards				10 days
Period after which entity will be in default for failure to make payment under loan agreement				5 days
Hallmark Hall of Fame Productions, LLC
Related Party Transactions
Number of movies under agreement | item			2
Number of movies aired on Hallmark Channel | item								4
Number of movies premiered under agreement | item			2
Hallmark Hall of Fame Productions, LLC | Exclusive television license
Related Party Transactions
Number of movies under agreement | item						16	58
Number of movies under contemporary Hallmark Hall of Fame titles | item							16
Number of movies under older titles | item							42
Period of license of titles		10 years				10 years	10 years
Total license fees payable						$ 10,000,000	$ 17,200,000
Exhibition windows over which the program license fees are payable in equal monthly installments						10 years	10 years
License fee per movie		$ 660,000
Hallmark Cards
Related Party Transactions
Number of movies under agreement | item	2
Advertising revenue to be recognized									$ 2,300,000
Advertising revenue recognized			$ 3,800,000
Amount received under agreement			$ 3,000,000
Hallmark Cards | Sublease agreement
Related Party Transactions
Future minimum lease payments under the agreement				$ 102,000
Leased space (in square feet) | ft²				5,681

Income Taxes (NOL) (Details)

Income Taxes (NOL) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Operating loss carryforwards
Income tax expense recorded for alternative minimum tax	$ 1,000,000	$ 594,000
AMT paid	$ 0	$ 61,000
Percentage of loss carryforwards used against AMT income	90.00%
Increase or decrease in the amount of unrecognized tax benefits for uncertain tax positions	$ 0
Accrued interest related to uncertain tax positions	$ 0		$ 0
Federal
Operating loss carryforwards
Net operating losses			305,000,000
State
Operating loss carryforwards
Valuation allowance related to NOLs			$ 2,300,000

Long Term Incentive Plan (Detai

Long Term Incentive Plan (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 01, 2016	Feb. 26, 2016	Dec. 31, 2015	Mar. 06, 2015	Mar. 04, 2015	Mar. 01, 2015	Sep. 05, 2014	Mar. 01, 2014	Mar. 01, 2013	Aug. 17, 2012	Mar. 01, 2012
LTI Agreements
Long Term Incentive Plan
Compensation expense included in selling, general and administrative expense	$ 1,400,000	$ 872,000
Liability related to agreement included in accounts payable and accrued liabilities	$ 5,500,000				$ 8,200,000
LTI Agreements | Minimum
Long Term Incentive Plan
Incentive award grant as a percentage of employee annual base salary	18.00%
Target award			$ 20,000					$ 29,000		$ 27,000	$ 20,000		$ 22,000
LTI Agreements | Maximum
Long Term Incentive Plan
Incentive award grant as a percentage of employee annual base salary	85.00%
Target award			797,000					741,000		707,000	680,000		$ 652,000
LTI Agreements | Employment Award
Long Term Incentive Plan
Portion of award in each grant (as a percent)	40.00%
Amount settled in cash				$ 1,308,000					$ 1,509,000
LTI Agreements | Performance Award
Long Term Incentive Plan
Portion of award in each grant (as a percent)	60.00%
Amount settled in cash				2,457,000		$ 1,938,000
Employee | 2012 Plan | Performance Award
Long Term Incentive Plan
Performance period	3 years
Independent director | LTI Agreements | Performance Award
Long Term Incentive Plan
Target award			$ 50,000	$ 294,000			$ 306,000	$ 50,000		$ 50,000	$ 50,000	$ 50,000