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Hallmark Cards, Inc.

Hallmark Cards, Inc.

EARLY HISTORY

HALLMARK HALL OF FAME, RETAIL SHOPS, AMBASSADOR CARDS

ACQUISITIONS: 197989

DIVERSIFICATION IN THE FACE OF INCREASING COMPETITION

2002 AND BEYOND: NEW ERA OF HALL LEADERSHIP

PRINCIPAL SUBSIDIARIES

PRINCIPAL DIVISIONS

PRINCIPAL COMPETITORS

FURTHER READING

2501 McGee Street
Kansas City, Missouri 64108-2615
U.S.A.
Telephone: (816) 274-5111
Toll Free: (800) 425-5627
Fax: (816) 274-5061
Web site: http://www.hallmark.com

Private Company
Incorporated:
1923 as Hall Brothers, Inc.
Employees: 16,000
Sales: $4.1 billion (2006)
NAIC: 511191 Greeting Card Publishers; 322233 Stationery, Tablet, and Related Product Manufacturing; 322299 All Other Converted Paper Product Manufacturing; 323118 Blankbook, Looseleaf Binders, and Devices Manufacturing; 339942 Lead Pencil and Art Good Manufacturing; 453110 Florists; 453220 Gift, Novelty, and Souvenir Stores; 513210 Cable Networks; 533110 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works)

Hallmark Cards, Inc., is the worlds largest greeting card company, creating 19,000 different designs and related products each year in more than 30 languages, and distributing them in more than 100 countries. In addition to the Hallmark flagship, the company also markets cards under the Ambassador and Expressions from Hallmark brand names. The companys products are sold in Hallmark retail outlets and other specialty stores, through mass merchandise stores (around 30,000 in the United States alone), and via the hallmark.com web site. Of the 3,700 Hallmark Gold Crown stores in the United States, the companys premier channel of distribution, about 450 are company-owned outlets, with the remainder independently owned and operated under licensing agreements.

Over the years, Hallmark has branched out into other products and services that use creativity and emotion to help people connect, including stationery, party goods, gift wrap, photo albums, cut flower arrangements, home decor, collectibles, books, and Christmas ornaments. In the late 1990s, the company acquired several specialized greeting card companies that operate as wholly owned subsidiaries, including DaySpring Cards, Inc., the leader in Christian personal expression products; Sunrise Greetings, producer and distributor of warm, sophisticated greeting cards including its flagship Sunrise Greetings line and the humor card line Weiner-Dog; William Arthur, which offers customized holiday cards, wedding invitations, fine stationery, and other high-end products; and Image Arts, which specializes in discount cards and boxed holiday cards for mass retailers and deep-discount stores. Hallmarks Crayola, LLC, subsidiary (formerly known as Binney & Smith Inc.) specializes in personal skill development products, including Crayola crayons, Magic Markers, Silly Putty art materials, creativity software, model kits, and art supplies for professionals and students. The firm launched Hallmark Magazine, a womens lifestyle magazine, in 2006. Hallmark also holds a 67 percent stake in Crown Media Holdings, Inc., a publicly traded company that owns and operates two cable television channels: the Hallmark Channel and the Hallmark Movie Channel. Even with the companys diversification, the greeting card remains Hallmarks mainstay, so much so that Hallmark has often been mistakenly credited with inventing it. The founding Hall family still owns about two-thirds of the private companys stock.

EARLY HISTORY

Hallmark was founded by Joyce C. Hall, a native of Norfolk, Nebraska, who as a teenager ran a postcard company with his older brothers. In 1910 Hall, still only 18, left the family business he had founded after a traveling salesman convinced him that Kansas City, Missouri, would serve him better as a wholesaling and distribution center. Almost immediately after arriving in Kansas City, Hall set up a mail-order postcard company in a small room at the Young Mens Christian Association, where he remained until his landlord complained about the volume of mail Hall was receiving. The new company was named Hall Brothers, a name justified the following year when Rollie Hall came to Kansas City to join his brother in the business.

At that time, picture postcards were all the rage in the United States, with the best ones imported from Europe. Very early on, however, Joyce Hall came to believe that the postcards appeal was quite limited. They were novelty items rather than a means of communication; with the leisure time required to write long letters diminishing, and the long-distance telephone call still a rare phenomenon, people would need a shorthand way of reaching each other by mail. Greeting cards suggested themselves as a viable alternative, so in 1912 Hall Brothers added them to its product line.

The outbreak of World War I bore out Halls contention. The supply of postcards from Europe dried up, but domestic products were of inferior quality and their popularity waned. Greeting cards stepped into the breach. In 1914 Hall Brothers bought a small press and began publishing its own line of Christmas cards. In 1915 a fire destroyed the companys entire inventory, putting it $17,000 in debt, but Joyce and Rollie Hall rebuilt the business. In 1921 they were joined by their brother William Hall. By 1922 Hall Brothers had recovered to the point where it was employing 120 people, including salespeople in all 48 states. Also that year, it diversified for the first time and started selling decorative gift wrap.

In 1923 the company formally incorporated under the name Hall Brothers, Inc., and two years later the Hallmark brand name appeared on the companys products for the first time. Over the next two decades, the company would attack its market aggressively through advertising. In 1928 Hall Brothers became the first greeting card company to advertise nationally when it took out an ad in Ladies Home Journal. In 1936, with the national economy emerging from the worst of the Great Depression, Hall Brothers went on the attack again, introducing an open display fixture for greeting cards that Joyce Hall had developed with the help of an architect. Previously, cards had always been kept under store counters, out of customers sight and usually in a disorganized state. In 1938 Hall Brothers advertised in the broadcast medium for the first time when it began sponsoring Tony Wons Radio Scrapbook on WMAQ radio in Chicago. Meantime, the companys first licensing deal was concluded in 1932, when it gained the right to use Walt Disney characters on its products.

When the United States entered World War II, the company pitched an appeal to friends and loved ones of military personnel with the slogan Keep em happy with mail. Hall Brothers would find its most famous and enduring slogan in 1944, however, when it started using the tagline When you care enough to send the very best, which had been suggested a few years earlier by Sales and Advertising Manager Ed Goodman. After the war, a staff artist created the companys logo, consisting of a five-pointed crown and the Hallmark name in script letters. Hall Brothers trademarked the logo in 1950.

COMPANY PERSPECTIVES

Hallmarks Vision: To be the company and brands that people turn to for superior products, services and experiences that enrich their lives by helping them communicate, connect and celebrate. Hallmarks Mission: Enriching Lives.

HALLMARK HALL OF FAME, RETAIL SHOPS, AMBASSADOR CARDS

The company established another landmark in advertising on Christmas Eve 1951, when it sponsored a television production of Gian Carlo Menottis opera Amahl and the Night Visitors. This was the first of the famous Hallmark Hall of Fame series, which two years later presented a production of Hamlet starring the noted British Shakespearean actor Maurice Evans. That broadcast marked the first time the entire play had ever been seen on U.S. television. As Joyce Hall himself often said, Good taste is good business.

Also in the early 1950s, Hall Brothers began opening the first of thousands of retail shops specializing in Hallmark cards. In 1954 the company changed its name to Hallmark Cards, Inc., having already used Hallmark as a brand name for 31 years. In 1959 the company introduced its Ambassador Cards line to tap into the lucrative market presented by shoppers at mass merchandisers such as supermarkets, discount stores, and drugstores. The next year Hallmark introduced its own line of party decorations and began featuring characters from Charles M. Schulzs Peanuts comic strip on its products.

KEY DATES

1910:
Joyce C. Hall sets up a mail-order postcard company in Kansas City, Missouri.
1911:
Halls company begins operating under the name Hall Brothers.
1912:
Greeting cards are added to the product line.
1923:
Company is incorporated as Hall Brothers, Inc.
1925:
The Hallmark brand name is used for the first time.
1928:
Hall Brothers becomes first greeting card company to advertise nationally with an ad in Ladies Home Journal.
1938:
First radio advertising through sponsorship of Tony Wons Radio Scrapbook on Chicagos WMAQ.
1944:
First use of the slogan When you care enough to send the very best.
1950:
Company trademarks its famous logo, consisting of a five-pointed crown and the Hallmark name in script letters.
1951:
Hallmark Hall of Fame series is launched with the companys sponsorship of a television production of the opera Amahl and the Night Visitors
Early 1950s:
First retail shop specializing in Hallmark cards opens.
1954:
Company changes its name to Hallmark Cards, Inc.
1959:
The Ambassador Cards line is launched to serve shoppers at mass merchandisers.
1967:
Springbok Editions, maker of jigsaw puzzles, is acquired.
1984:
Binney & Smith, maker of Crayola crayons and other art products, is acquired.
1986:
Irvine O. Hockaday, Jr., becomes the first person outside the Hall family to serve as CEO; Shoebox Greetings line of nontraditional cards is launched.
1994:
RHI Entertainment, Inc., is acquired and is renamed Hallmark Entertainment, Inc.; the Hallmark Gold Crown Card, a frequent-buyer reward program for customers of selected Hallmark retail stores, is introduced.
1997:
Expressions from Hallmark is launched, marking the debut of the Hallmark brand in the mass merchandising market; William Arthur, Inc., maker of customized and prepackaged stationery products, is acquired; company web site adds e-commerce features.
1998:
Hallmark completes several acquisitions: U.K.-based Creative Publishing, Editions DALIX of France, and the U.S. firm InterArt Holding; a significant stake in the Odyssey channel is acquired.
1999:
A line of 99-cent greeting cards is introduced under the Warm Wishes brand; DaySpring Cards is acquired.
2000:
A partial offering of stock in Crown Media Holdings, Inc., is completed.
2001:
The Odyssey channel is relaunched as theHallmark Channel.
2002:
Following Hockadays retirement, Donald J. Hall, Jr., grandson of the founder, is named CEO.
2006:
Hallmarks new Say It with Music greeting cards are an instant hit; Hallmark Magazine is launched.
2007:
Binney & Smith is renamed Crayola, LLC.

In 1966 Joyce Hall retired as president and CEO of the company he had founded. Handing the reins to his son, Donald Hall, Joyce Hall nevertheless remained active in company affairs as chairman until his death in 1982. Joyce Hall was not only a wealthy and successful businessman when he died, but also a member of the French Legion of Honor and a commander of the British Empire. He had been friends with British Prime Minister Winston Churchill and with U.S. Presidents Harry Truman and Dwight Eisenhower. For the latter Hall Brothers custom-designed an official presidential Christmas card in 1953.

Among Donald Halls first important moves as CEO of Hallmark were the 1966 establishment of Hallmark International to further expand the company abroad and the 1967 acquisition of Springbok Editions, maker of jigsaw puzzles. The next year, the company broke ground on the Crown Center, a $500 million retail, commercial, and residential complex intended to revitalize an area near downtown Kansas City and financed entirely with company funds. Hallmark created a new subsidiary, Crown Center Redevelopment Corporation, to oversee it.

ACQUISITIONS: 197989

In 1979 Hallmark acquired Georgia-based lithographer Litho-Krome Corporation. In 1981 the company formed a division, Hallmark Properties, to create and administer licensing projects. This division went on to create Hallmarks Rainbow Brite, Purr-Tenders, and Timeless Tales character merchandise, and also oversaw the companys licenses for Peanuts and Garfield cartoon characters. Later this division would be renamed Hallmark Licensing (in 1992) and its licensed properties would include Harry Potter, Dr. Seuss, Barbie, Winnie the Pooh, Looney Tunes, Blues Clues, and Batman.

The Crown Center development suffered a disaster in 1981 when two suspended walkways at the centers Hyatt Regency hotel collapsed, killing 114 people and injuring 225. After his fathers death in 1982, Donald Hall added the chairmanship to his duties as CEO. In 1984 Hallmark acquired Binney & Smith, the Pennsylvania-based maker of Crayola crayons and Liquitex art materials. In 1986 Donald Hall retired as CEO and handed the post to the company president, Irvine O. Hockaday, Jr., who thus became the first person outside the Hall family to run the company.

In 1987 Hallmark, after being a prominent advertiser in the broadcast media for many years, became an owner as well when it acquired a group of Spanish-language television stations from Spanish International Communication. The next year, it added another station purchased from Bahia de San Francisco Television. Also in 1988, Hallmark acquired a Spanish-language network, Univision, and amalgamated all of its holdings in a subsidiary, Univision Holdings. Based in New York, the subsidiary ran the nine full-power stations under the name Univision Station Group.

During the mid-1980s small greeting card companies began competing for Hallmarks market position with a diverse array of cards that became favorites. In the mid-1980s Hallmark fought back with its Personal Touch and Shoebox Greetings series (the latter debuting in 1986). Many of these cards, however, bore a resemblance to rival designs that some found too striking. In 1986 Blue Mountain Arts, Inc., which produced nonoccasion cards featuring poetry and pastel illustrations to produce a concentrated emotional effect, sued Hallmark for copyright and trade infringement and unfair competition. The initial decision went against Hallmark, which appealed ultimately to the U.S. Supreme Court. When the Supreme Court refused to hear the case in 1988, Hallmark agreed to discontinue its Personal Touch line. Financial terms of the settlement were not disclosed.

DIVERSIFICATION IN THE FACE OF INCREASING COMPETITION

Hallmarks biggest challenge during the early 1990s was confronting its continuing loss of market share to the number two and three companies in the greeting card industry, American Greetings Corporation and Gibson Greetings, Inc., respectively. From 1990 to 1995, it was estimated that Hallmarks market share fell from 50 percent to 45 percent. The reason for Hallmarks decline rested in the very backbone of its empire: the specialty card and gift shops that sold the Hallmark brand, which by the early 1990s numbered more than 10,000. Over a long period, these shops had fallen victim to changing buying patterns in particular among women, who still bought 90 percent of all cards sold. Pressed for time, more and more consumers were opting to purchase cards at one-stop shopping outletssupermarkets, drugstore chains, and large discounterssuch as Wal-Mart Stores, Inc. In the early 1970s more than half of all cards were sold in specialty shops; by the early 1990s only about 30 percent were. American Greetings and Gibson, which did not have such extensive ties to the card shops, were able to recognize the trend and shift to accommodate it. Hallmark, however, was in a bind. Continuing to rely so heavily on specialty shops would do nothing to halt its market share decline, but it could not simply abandon the shops, for doing so would bankrupt many of them, not something a company as paternalistic as Hallmark could seriously consider.

One strategy was to diversify away from greeting cards even further. In 1990 Hallmark acquired Will-itts Designs, a maker of collectibles, but sold the company only three years later. Likewise, Hallmarks venture into Spanish-language television was abandoned in 1992 at a loss of $10 million when Univision was sold to Grupo Televisa. Cable television was Hallmarks next foray with the 1991 formation of a Crown Media, Inc., subsidiary to which was added Cenom Cable in St. Louis, through the purchase of a controlling interest for $1 billion. In 1994 this venture too was cast aside when Hallmark sold Crown Media to Charter Communications Inc. for $900 million.

During this period Hallmark also updated its product line, offering a more high-tech approach to card purchasing. In 1991 the Personalize it! in-store kiosk was introduced (later called Touch-Screen Greetings), through which customers were able to create computer-generated personalized greeting cards. The following year Hallmark filed suit for infringement of its kiosk patent against American Greetings and its Creata-Card kiosk. The suit was settled in 1995 with each company receiving a worldwide, nonexclusive license to use the technology; no other details on the settlement were provided at that time.

Moreover, in 1994, Hallmark developed recordable greeting cards in partnership with Information Storage Devices. Initially retailing for $7.95 each, these cards allowed a sender to record a personal message, which would then play back each time the card was opened. Also in 1994 came the debut of the Hallmark Gold Crown Card, a frequent-buyer reward program for customers at selected Hallmark retail stores. Two years later, the Hallmark stores participating in the reward program were rebranded under the Hallmark Gold Crown name through a $100 million remodeling program in which the stores were also provided with a fresh look. In addition to the frequent-buyer program, the Gold Crown stores differed from regular Hallmark stores in several respects; they had their own lines of cards and exclusive merchandise, and they were all owned by individuals and were not franchises.

In the face of declining profits brought on by declining market share, Hallmark went through a series of reengineering and restructuring efforts in the early 1990s in an attempt to hold costs down. U.S. and Canadian operations were consolidated, and a 1995 restructuring brought together for each Hallmark card brand its administrative, marketing, and product development functions.

Additional diversification moves in the area of entertainment were made in the mid-1990s. In 1994 Hallmark acquired RHI Entertainment, Inc., for $365 million. RHI was the television production company responsible for Hallmarks Hall of Fame productions. Hallmark thus acquired the worlds leading producer of family-oriented entertainment, which it promptly renamed Hallmark Entertainment, Inc., and set up as a subsidiary of Hallmark Cards. Then in 1995, Hallmark purchased a 9.9 percent stake in European broadcaster Flextech for $80 million. Flextech and Hallmark created a family-oriented international cable television network, the Hallmark Entertainment Network, which commenced operations in Ireland and the United Kingdom in 1996. Next, Hallmark Entertainment, Inc., teamed up with the Jim Henson Company in 1998 to launch the Kermit Channel, a pay television channel featuring general family entertainment fare. Also in 1998, Hallmark purchased a significant stake in the Odyssey channel, a cable network that had been launched in 1988 as a religious channel and that was in the process of being transformed into a family-oriented entertainment channel.

Given the uneven success of Hallmarks other ventures, greeting cards remained the companys most important endeavor. New promotions of Hallmark cards in the mid-1990s included a sneak-a-peek advertising campaign, comprising a series of commercials in which people were caught looking at the backs of the cards they had received, just to make sure they were Hallmarks. Continuing to seek ways to reverse the decline in its share of the greeting card market, the Hallmark brand was introduced into the mass merchandiser market for the first time with the 1997 launch of Expressions from Hallmark. The cards featured the Hallmark logo on the back and were initially marketed though more than 5,000 discounters, supermarkets, and drugstores. This move angered many owners of Hallmark retail stores, who feared that their sales would suffer. In 1999 came the debut of yet another new line called Warm Wishes, which featured cards priced at 99 cents and aimed at increasingly value-conscious consumers. The Warm Wishes line debuted in more than 17,000 retail outlets across the United States. The new initiatives appeared to be working, as Hallmark reported that its share of greeting card sales in the U.S. retail market increased from 47 percent in 1997 to 51 percent in 1998 to 52 percent in 1999.

Although the company had been involved in the online world in various ways since the mid-1980s, Hallmarks first serious move into the Internet came in 1996 with the launch of its corporate web site, hallmark.com. Primarily offering corporate news and product information, the site did offer some early versions of free electronic greeting cards (or e-cards). In November 1997 an overhauled hallmark.com went live with a much more extensive selection of free e-cards, some e-cards that sold for $1.50, and new e-commerce features, such as the online retailing of gift products, including jewelry, flowers, and stuffed animals. In late 1999 Hallmark began offering all of its e-cards free of charge.

The pace of acquisitions quickened in the late 1990s as Hallmark continued to diversify. In 1997 the company purchased William Arthur, Inc., a West Kennebunk, Maine-based maker of customized and prepack-aged stationery products. Overseas growth was pursued as well in response to U.S. greeting card sales being flat for several years. Hallmark in 1998 acquired Creative Publishing plc, a leading U.K. maker of boxed and seasonal cards, for about $310 million. Creative was merged into the companys existing U.K. business, which was renamed Hallmark Cards (Holdings) UK. The purchase of Creative increased Hallmarks share of the U.K. greeting card market to nearly 30 percent, making it the number one player there. Hallmark similarly expanded in France in 1998 through the purchase of Editions DALIX. Two more acquisitions were completed in the United States in 1998: Bloomington, Indiana-based InterArt Holding Corporation, maker of high-quality greeting cards and related products whose product line included items designed by artist Mary Engelbreit; and Tapper Candies, a maker of candy, toys, and party favors based in Cleveland. During 1999 Hallmark acquired DaySpring Cards, Inc., the leading creator of Christian personal expression products. Adding the Siloam Springs, Arkansas-based DaySpring provided Hallmark with increased access to the fast-growing Christian card market. A second acquisition in 1999 brought The Picture People into the Hallmark fold. Based in Foster City, California, The Picture People operated a national chain of mall-based portrait studios.

In mid-1999 Hallmark launched an ambitious ten-year strategic plan, aiming to triple revenues by 2010, to $12 billion. The company planned to remain centered around its core greeting card business, but would also pursue growth and expansion in five additional business platforms: caring gift solutions, memories, life celebrations, personal development, and family entertainment. Subsequent developments in greeting cards included the launch of Hallmark en Español, a line of more than 1,000 Spanish-language greeting cards (relaunched in 2003 as Sinceramente Hallmark); the introduction of Hallmark Fresh Ink, a line of hipper, sometimes risque cards aimed at women between the ages of 18 and 39; and the signing of Maya Angelou to a licensing deal to develop cards and specialty gifts featuring newly written poetry and sentiments from the poet laureate. As the 21st century began, Hallmark had to contend with an enlarged competitor in the form of American Greetings, which purchased the number three card company, Gibson Greetings, in 2000. Following the deal, American controlled 40 percent of the U.S. card market, compared to Hallmarks market share of just over 50 percent. Also in 2000, Hallmark acquired Gift Certificate Center, an online provider of gift certificates for business and consumer use; this subsidiary was renamed Hallmark Insights in 2006.

In the area of family entertainment, meantime, Hallmark in May 2000 made a partial offering of stock in Crown Media Holdings, Inc., a subsidiary of Hallmark Entertainment that operated and distributed the Hallmark Entertainment Network, the Kermit Channel, and the Odyssey channel. Hallmark retained a 49.1 percent stake in Crown Media and 90 percent of its voting rights. In 2001 Odysseys name was changed to the Hallmark Channel, and the network began stepping up its showings of Hallmark Hall of Fame productions. Crown Media also began rebranding its Hallmark Entertainment Network outlets located outside the United States under the Hallmark Channel name.

Later in 2001 Hallmark lost a major account when Kmart Corporation elected not to renew its contract with the greeting card giant and to instead make American Greetings its exclusive card supplier. The impact of this decision was less than severe given Kmarts shaky financial condition and its subsequent major round of store closings; Hallmark continued to supply both Wal-Mart and Walgreen Co., two retailers that were growing steadily. In September 2001 Crown Media acquired Hallmark Entertainments library of more than 700 films for $815.3 million in stock and assumed debt. As a result of this transaction, Hallmark Cards stake in Crown Media was boosted to approximately 67 percent.

2002 AND BEYOND: NEW ERA OF HALL LEADERSHIP

At the end of 2001, Hockaday retired having shepherded the company through a decade and a half during which revenues increased from less than $1.5 billion to more than $4 billion. As a result of Hallmarks aggressive diversification during his tenure, revenue from non-greeting card operations increased from half of the total to two-thirds. Taking over as CEO on January 1, 2002, was Donald J. Hall, Jr., grandson of the founder, whose father remained chairman. The 45-year-old Hall, Jr., had spent more than 30 years at Hallmark working in a variety of areas, most recently as executive vice-president of strategy and development. Since 1996 he had also served as vice-chairman of the companys board, a position he retained. The return of the founding family to day-to-day management was not surprising given that the Hall family continued to own more than three-quarters of the companys stock; the remainder was in the hands of Hallmark employees.

The new leader acted quickly to put his own mark on the company. He shelved Hockadays much-ballyhooed goal of tripling sales by 2010 because he concluded that it had become a distraction. At this time, greeting card sales remained stagnant while Hallmark concurrently faced a plethora of new paper-based card competitors and also witnessed the ascendance of new technologies, including instant and text messaging, providing consumers with other options for personal expression. Under these market pressures, Hallmark began seeking opportunities to shave costs, and in mid-2002 it started shutting down the manufacturing plant at its downtown Kansas City headquarters, shifting the production to other factories. In 2004 the company outsourced a portion of its information-technology services. Such restructuring moves contributed to a reduction in the worldwide workforce from 20,000 in 2002 to 18,000 in 2005.

In the fall of 2004 the company launched a program to revitalize its network of Hallmark Gold Crown stores. Rolled out over a span of years, the program involved putting a fresh mix of Hallmark products in the stores and reorganizing their layouts into product departments based on consumer needs. The design changes were aimed at making it easier to navigate through the stores and more convenient to shop there.

At the same time, Hall, Jr., began pulling back from some of his predecessors diversification initiatives. In late 2005 Hallmark sold Picture People in a typical divestment of a noncore asset. The company also significantly scaled back its entertainment operations. In early 2006 the Hallmark Entertainment production company was sold to the units president, Robert Halmi, Jr., and the private investment firm Kelso & Co. This move followed Crown Medias April 2005 sale of its international business to a British investor group, which reduced Crowns main assets to the Hallmark Channel and the film library Hallmark had sold it in 2001. In August 2005 Hallmark placed Crown Media itself on the block but failed to find a buyer.Business Week reported in January 2007 that Hallmark was once again seeking to sell Crown, which had lost nearly $1.7 billion since being taken public in 2000, while its stock had fallen 72 percent. Although the Hallmark Channel was one of the most-watched cable networks, it generated correspondingly small fees from cable distributors mainly because the viewers tended to be older and thus less appealing to advertisers.

In the meantime, Hallmark boosted sales at its Gold Crown stores with the introduction in 2006 of a new line of Say It with Music greeting cards, retailing at $4.99 apiece. Although sound cards were not new, the new Hallmark line offered better sound quality via digital technology and featured songs from original artists, such as Earth, Wind and Fires Sing a Song and George Thorogoods Bad to the Bone. The sound cards, which lasted two years and could be played 200 times, were an instant hit, representing Hallmarks biggest greeting card introduction since the debut of Shoe-box Greetings two decades earlier. Based on this success, Hallmark began expanding the line to include cards using dialogue and music from television shows and movies.

Another new initiative in 2006 was the launching of Hallmark Magazine, a womens lifestyle magazine focusing on family, friends, home, and community that began with an initial circulation of 400,000 copies. Three years in the making, the magazine was envisioned as an extension of the Hallmark brand, one that could help promote the brand and fill a gap in the market. A companion web site, located at hallmarkmagazine.com, debuted in 2006 as well. At year-end, Hallmark melded its sales, category management, and customer strategy and planning divisions into a new division called customer development. This realignment, which resulted in the elimination of 160 full-time positions, was part of the firms ongoing efforts to improve its operations efficiency and effectiveness.

In early 2007 Binney & Smith changed its name to Crayola, LLC. Successful new product introductions at Crayola, which had been going through a reengineering effort, helped drive sales up 9 percent in 2006 to $534 million. Hallmark reported that its overall 2006 sales of $4.1 billion represented a 5 percent increase, after eliminating divested operations from the 2005 total. The company continued to seek ways to bolster its core operations. In February 2007, for example, Hallmark introduced Journeys, a new line of encouragement cards available exclusively at Gold Crown outlets that offered personal messages of support for someone undergoing chemotherapy, quitting smoking, fighting depression, dealing with a loved one in the military, caring for an aged parent, or contending with other difficult times. Through such new product development efforts, Hallmark Cards showed its determination to remain at the top of the greeting card industry as its centenary neared.

Joan Harpham

Updated, Douglas Sun; David E. Salamie

PRINCIPAL SUBSIDIARIES

Crayola, LLC; Crown Center Redevelopment Corporation; Crown Media Holdings, Inc. (67%); DaySpring Cards, Inc.; Hallmark Insights; Halls Merchandising, Inc.; Image Arts; Irresistible Ink, Inc.; Litho-Krome Company; Sunrise Greetings; William Arthur; Hallmark Cards Australia, Ltd.; Hallmark Belgium N.V.; Hallmark Canada Inc.; Nihon Hallmark K.K. (Japan); Hallmark Mexicana, S. de R.L. de C.V. (Mexico); Hallmark Cards Nederland, B.V. (Netherlands); Hallmark Cards New Zealand Ltd.; Hallmark Cards Iberica, S.A. (Spain); Hallmark Cards PLC (U.K.).

PRINCIPAL DIVISIONS

Hallmark International.

PRINCIPAL COMPETITORS

American Greetings Corporation; CSS Industries, Inc.; Taylor Corporation.

FURTHER READING

Beatty, Sally, Hallmark, Media Firms Pool Interests to Build Network, Wall Street Journal, July 5, 2000, p. B4.

Chandler, Susan, Can Hallmark Get Well Soon? Business Week, June 19, 1995, pp. 6263.

Coleman, Calmetta Y., Hallmark to Buy U.K. Card Firm for $310 Million, Wall Street Journal, July 10, 1998, p. B4.

Ebeling, Ashlea, Wild Card, Forbes, November 13, 2000, pp. 25051.

Fitzgerald, Kate, Hallmark Alters Focus As Lifestyles Change, Advertising Age, October 25, 1994, p. 4.

Flint, Joe, Odyssey Cable Network to Change Its Name to Hallmark Channel, Wall Street Journal, March 29, 2001, p. B15.

Frazier, Mya, Battle for Retail Real Estate: American Greetings, Hallmark Duke It Out in $7 Billion Industry, Cleveland Plain Dealer, November 8, 2000, p. 1C.

From Someone Who Loves You, Economist, August 10, 1991, p. 63.

Fuller, Jennifer Mann, Going for the Gold: Hallmark Cards Makes Strong Investment to Ensure Success of Its 4,800-Store Network, Kansas City (Mo.) Star, December 17, 1997, p. B1.

Grover, Ronald, Far from Hallmarks Best Moment: The Hall Clan Wants to Sell Its Money-Losing TV Channel, but Buyers Arent Exactly Lining Up, Business Week, January 29, 2007, p. 85.

Hall, Joyce C., with Curtiss Anderson, When You Care Enough, Kansas City, Mo.: Hallmark, 1979, 269 p.

Hamilton, Martha M., Floral Retailers Bunch Up in a Crowded Field: Is There Room to Bloom for New Competitors? Washington Post, February 12, 2000, p. E1.

Hayes, David, Cyber Greetings: Sending Instant Holiday Cards Is Just a Click Away, Kansas City (Mo.) Star, December 21, 1996, p. B1.

Helliker, Kevin, Hallmark Finds Another Market Niche: The Sorrowful, Wall Street Journal, December 24, 1998, p. B1.

Hirshey, Gerri, Happy Day to You, New York Times Magazine, July 2, 1995, pp. 20+.

Howard, Elizabeth G., Hallmarks $4 Billion Formula, Kansa City Business Journal, June 16, 1995, p. 17.

Kinni, Theodore B., The Reengineering Rage, Industry Week, February 7, 1994, p. 11.

Mann, Jennifer, Angelou, Hallmark Team Up, Kansas City (Mo.) Star, November 14, 2000, p. D4.

, At Hallmark, a Hall Again Takes Charge, Kansas City (Mo.) Star, October 5, 2001, p. A1.

, CEO Ruminates on Hallmark, Kansas City (Mo.) Star, October 9, 2001, p. D4.

, Greeting Card Firms in Patent Dispute: Suits Come and Go Between Hallmark, American Greetings, Kansas City (Mo.) Star, February 1, 2001, p. C1.

, Hallmark Attacking Competitor over Technology: Web Site for American Greetings Corp. Is Focus of Lawsuit, Kansas City (Mo.) Star, June 3, 2000, p. C1.

, Hallmark Cards Divests Production Company, Kansas City (Mo.) Star, December 9, 2005, p. C1.

, Hallmark Greets Fresh Challenges, Kansas City (Mo.) Star, February 13, 2005, p. A1.

, Hallmark Makes Changes in Profit Sharing, Kansas City (Mo.) Star, November 1, 2002, p. C1.

, Hallmark Plans Buyout in U.K., Kansas City (Mo.) Star, July 10, 1998, p. A1.

, Hallmark to Start a Site for Retailers: Ebizmix.com Has Already Lined Up 70 Suppliers, Kansas City (Mo.) Star, June 7, 2000, p. C1.

, Progress Is Slow for Hallmark.com: Web Site Has Plenty of Visitors So Far, but Few Purchases, Kansas City (Mo.) Star, June 13, 2000, p. E9.

Nelson, Emily, Dearest Mom, Greetings from My CD-ROM, Wall Street Journal, September 4, 1996, p. B1.

Orenstein, Susan, Roses Are Red, Violets Are Blue, Hallmarks Online, but What Can It Do? Industry Standard, November 20, 2000.

Schiller, Zachary, and Ron Grover, And Now, a Show from Your Sponsor, Business Week, May 22, 1995, pp. 1002.

Stern, William M., Loyal to a Fault: Its Brand Name Is August, Its Profits a Wow! But Hallmark Cards Had Better Get with ItNow! Forbes, March 14, 1994, pp. 5859.

Story, Louise, Brought to You by That Logo on the Hallmark Greeting Card, New York Times, December 27, 2006, p. C3.

Weiner, Steve, Do They Speak Spanish in Kansas City? Forbes, January 25, 1988, p. 46.

Young, Gordon, Card Sharks, Utne Reader, May/June 1993, p. 132.

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Hallmark Cards, Inc.

Hallmark Cards, Inc.

2501 McGee Street
Post Office Box 419580
Kansas City, Missouri 64141-6580
U.S.A.
Telephone: (816) 274-5111
Fax: (816) 274-5061
Web site: http://www.hallmark.com

Private Company
Incorporated:
1923 as Hall Brothers, Inc.
Employees: 25,000
Sales: $4.3 billion (2000)
NAIC: 511191 Greeting Card Publishers; 322233 Stationery, Tablet, and Related Product Manufacturing; 322299 All Other Converted Paper Product Manufacturing; 339942 Lead Pencil and Art Good Manufacturing; 512110 Motion Picture and Video Production; 512120 Motion Picture and Video Distribution; 513210 Cable Networks; 531120 Lessors of Nonresidential Buildings (Except Miniwarehouses); 541921 Photography Studios, Portrait

Hallmark Cards, Inc. is the worlds largest greeting card company, creating 30,000 different designs and related products each year in more than 30 languages, and distributing them in more than 100 countries. In addition to the Hallmark flagship, the company also markets cards under the Ambassador and Expressions from Hallmark brand names. The companys products are sold in Hallmark retail outlets, through mass merchandise stores, and via the hallmark.com web site. Over the years, Hallmark has branched out into other products and services that use creativity and emotion to help people connect, including stationery, party goods, gift wrap, photo albums, cut flower arrangements, home decor, collectibles, books, and Christmas ornaments. In the late 1990s, the company acquired several specialized greeting card companies that operate as wholly owned subsidiaries, including DaySpring Cards, Inc., the leader in Christian personal expression products; Inter Art Holding Corporation, maker of high-quality greeting cards and related products including the Mary Engelbreit and Holly Pond Hill lines; and William Arthur, Inc., which offers customized holiday cards, wedding invitations, fine stationery, and other high-end products. Hallmarks Binney & Smith Inc. subsidiary specializes in personal skill development products, including Crayola crayons, Magic Markers, modeling material, creativity software, model kits, and art supplies for professionals and students. Hallmark also creates family-oriented television programming through its Hallmark Entertainment, Inc. subsidiary. Hallmark Entertainment holds a controlling majority stake in Crown Media Holdings, Inc., operator and distributor of two cable television channels: the Hallmark Channel and the Kermit Channel. Yet another wholly owned subsidiary is The picture People, operator of more than 250 mall-based portrait studios in 26 states. Even with the firms diversification, the greeting card remains Hallmarks mainstayso much so that Hallmark has often been mistakenly credited with inventing it.

Early History

Hallmark was founded by Joyce C. Hall, a native of Norfolk, Nebraska, who as a teenager ran a postcard company with his older brothers. In 1910 Hall, still only 18, left the family business he had founded after a traveling salesman convinced him that Kansas City, Missouri, would serve him better as a wholesaling and distribution center. Almost immediately after arriving in Kansas City, Hall set up a mail-order postcard company in a small room at the Young Mens Christian Association, where he remained until his landlord complained about the volume of mail Hall was receiving. The new company was named Hall Brothers, a name justified the following year when Rollie Hall came to Kansas City to join his brother in the business.

At that time, picture postcards were all the rage in the United States, with the best ones imported from Europe. Very early on, however, Joyce Hall came to believe that the postcards appeal was quite limited. They were novelty items rather than a means of communication; with the leisure time required to write long letters diminishing, and the long-distance telephone call still a rare phenomenon, people would need a shorthand way of reaching each other by mail. Greeting cards suggested themselves as a viable alternative, so in 1912 Hall Brothers added them to its product line.

The outbreak of World War I bore out Halls contention. The supply of postcards from Europe dried up, but domestic products were of inferior quality and their popularity waned. Greeting cards stepped into the breach. In 1914 Hall Brothers bought a small press and began publishing its own line of Christmas cards. In 1915 a fire destroyed the companys entire inventory, putting it $17,000 in debt, but Joyce and Rollie Hall rebuilt the business. In 1921 they were joined by their brother William Hall. By 1922 Hall Brothers had recovered to the point where it was employing 120 people, including salespeople in all 48 states. Also that year, it diversified for the first time and started selling decorative gift wrap.

In 1923 the company formally incorporated under the name Hall Brothers, Inc., and two years later the Hallmark brand name appeared on the companys products for the first time. Over the next two decades, the company would attack its market aggressively through advertising. In 1928 Hall Brothers became the first greeting card company to advertise nationally when it took out an ad in Ladies Home Journal. In 1936, with the national economy emerging from the worst of the Great Depression, Hall Brothers went on the attack again, introducing an open display fixture for greeting cards that Joyce Hall had developed with the help of an architect. Previously, cards had always been kept under store counters, out of customers sight and usually in a disorganized state. In 1938 Hall Brothers advertised in the broadcast medium for the first time when it began sponsoring Tony Wons Radio Scrapbook on WMAQ radio in Chicago. Meantime, the companys first licensing deal was concluded in 1932, when it gained the right to use Walt Disney characters on its products.

When the United States entered World War II, the company pitched an appeal to friends and loved ones of military personnel with the slogan Keep em happy with mail. Hall Brothers would find its most famous and enduring slogan in 1944, however, when it started using the tagline When you care enough to send the very best, which had been suggested a few years earlier by Sales and Advertising Manager Ed Goodman. After the war, a staff artist created the companys logo, consisting of a five-pointed crown and the Hallmark name in script letters. Hall Brothers trademarked the logo in 1950.

1950s and 1960s: Hallmark Hall of Fame, Retail Shops, Ambassador Cards

The company established another landmark in advertising on Christmas Eve 1951, when it sponsored a television production of Gian Carlo Menottis opera Amahl and the Night Visitors. This was the first of the famous Hallmark Hall of Fame series, which two years later presented a production of Hamlet starring the noted British Shakespearean actor Maurice Evans. That broadcast marked the first time the entire play had ever been seen on U.S. television. As Joyce Hall himself once said, Good taste is good business.

Also in the early 1950s, Hall Brothers began opening the first of thousands of retail shops specializing in Hallmark cards. In 1954 the company changed its name to Hallmark Cards, Inc., having already used Hallmark as a brand name for 31 years. In 1959 the company introduced its Ambassador Cards line to tap into the lucrative market presented by shoppers at mass merchandisers such as supermarkets, discount stores, and drugstores. The next year Hallmark introduced its own line of party decorations and began featuring characters from Charles M. Schulzs Peanuts comic strip on its products.

In 1966 Joyce Hall retired as president and CEO of the company he had founded. Handing the reins to his son, Donald Hall, Joyce Hall nevertheless remained active in company affairs as chairman until his death in 1982. Joyce Hall was not only a wealthy and successful businessman when he died, but also a member of the French Legion of Honor and a commander of the British Empire. He had been friends with British Prime Minister Winston Churchill and with U.S. Presidents Harry Truman and Dwight Eisenhower. For the latter Hall Brothers custom-designed an official presidential Christmas card in 1953.

Among Donald Halls first important moves as CEO of Hallmark were the 1966 establishment of Hallmark International to further expand the company abroad and the 1967 acquisition of Springbok Editions, maker of jigsaw puzzles. The next year, the company broke ground on the Crown Center, a $500 million retail, commercial, and residential complex intended to revitalize an area near downtown Kansas City and financed entirely with company funds. Hallmark created a new subsidiary, Crown Center Redevelopment Corporation, to oversee it.

1980s Acquisitions

In 1979 Hallmark acquired Georgia-based lithographer Litho-Krome Corporation. In 1981 the company formed a division, Hallmark Properties, to create and administer licensing projects. This division went on to create Hallmarks Rainbow Brite, Purr-Tenders, and Timeless Tales character merchandise, and also oversaw the companys licenses for Peanuts and Garfield cartoon characters. Later still, this division would be renamed Hallmark Licensing (in 1992) and its licensed properties would include Harry Potter, Dr. Suess, Barbie, Winnie the Pooh, Looney Tunes, Blues Clues, and Batman.

Company Perspectives:

This Is Hallmark: We believe: That our products and services must enrich peoples lives and enhance their relationships. That creativity and quality-in our concepts, products and services-are essential to our success. That the people of Hallmark are our companys most valuable resource. That distinguished financial performance is a must, not as an end in itself, but as a means to accomplish our broader mission. That our private ownership must be preserved.

The values that guide us are: Excellence in all we do. Ethical and moral conduct at all times and in all our relationships. Innovation in all areas of our business as a means of attaining and sustaining leadership. Corporate social responsibility to Kansas City and to each community in which we operate. These beliefs and values guide our business strategies, our corporate behavior, and our relationships with suppliers, customers, communities and each other.

The Crown Center development suffered a disaster in 1981 when two suspended walkways at the centers Hyatt Regency hotel collapsed, killing 114 people and injuring 225. After his fathers death in 1982, Donald Hall added the chairmanship to his duties as CEO. In 1984 Hallmark acquired Binney & Smith, the Pennsylvania-based maker of Crayola crayons and Liquitex art materials. In 1986 Donald Hall retired as CEO and handed the post to the company president, Irvine O. Hockaday, Jr.

In 1987 Hallmark, after being a prominent advertiser in the broadcast media for many years, became an owner as well when it acquired a group of Spanish-language television stations from Spanish International Communication. The next year, it added another station purchased from Bahia de San Francisco Television. Also in 1988, Hallmark acquired a Spanish-language network, Univision, and amalgamated all of its holdings in a subsidiary, Univision Holdings. Based in New York, the subsidiary ran the nine full-power stations under the name Univision Station Group.

During the mid-1980s small greeting card companies began competing for Hallmarks market position with a diverse array of cards that became favorites. In the mid-1980s Hallmark fought back with its Personal Touch and Shoebox Greetings series (the latter debuting in 1986). Many of these cards, however, bore a resemblance to rival designs that some found too striking. In 1986 Blue Mountain Arts, Inc., which produced non-occasion cards featuring poetry and pastel illustrations to produce a concentrated emotional effect, sued Hallmark for copyright and trade infringement and unfair competition. The initial decision went against Hallmark, which appealed ultimately to the Supreme Court. When the Supreme Court refused to hear the case in 1988, Hallmark agreed to discontinue its Personal Touch line. Financial terms of the settlement were not disclosed.

1990s into the 21st Century: Diversifying in the Face of Increasing Competition

Hallmarks biggest challenge during the early 1990s was confronting its continuing loss of market share to the number two and three companies in the greeting card industry, American Greetings Corporation and Gibson Greetings, Inc., respectively. From 1990 to 1995, it was estimated that Hallmarks market share fell from 50 to 45 percent. In the mid-1990s, some industry experts were even suggesting that American Greetings would overtake Hallmark sometime between 1999 and 2004.

Key Dates:

1910:
Joyce C. Hall sets up a mail-order postcard company in Kansas City, Missouri.
1911
: Halls company begins operating under the name Hall Brothers.
1912:
Greeting cards are added to the product line.
1923:
Company is incorporated as Hall Brothers, Inc.
1925:
The Hallmark brand name is used for the first time.
1928:
Hall Brothers becomes first greeting card company to advertise nationally with an ad in Ladies Home Journal.
1938:
First radio advertising through sponsorship of Tony Wons Radio Scrapbook on Chicagos WMAQ.
1944:
First use of the slogan When you care enough to send the very best.
1950:
Company trademarks its famous logo, consisting of a five-pointed crown and the Hallmark name in script letters.
1951:
Hallmark Hall of Fame series is launched with the companys sponsorship of a television production of the opera Amahl and the Night Visitors.
Early 1950s:
First retail shop specializing in Hallmark cards opens.
1954:
Company changes its name to Hallmark Cards, Inc.
1959:
The Ambassador Cards line is launched to serve shoppers at mass merchandisers.
1967:
Springbok Editions, maker of jigsaw puzzles, is acquired.
1984:
Binney & Smith, maker of Crayola crayons and other art products, is acquired.
1986:
Shoebox Greetings line of nontraditional cards is launched.
1994:
RHI Entertainment, Inc. is acquired and is later renamed Hallmark Entertainment, Inc.; the Hallmark Gold Crown Card, a frequent-buyer reward program for customers of selected Hallmark retail stores, is introduced.
1997:
Expressions from Hallmark is launched, marking the debut of the Hallmark brand in the mass merchandising market; William Arthur, Inc., maker of customized and prepackaged stationery products, is acquired; company web site adds e-commerce features.
1998:
Hallmark completes several acquisitions: U.K.-based Creative Publishing, Editions DALIX of France, and InterArt Holding and Tapper Candies, both U.S.-based; a significant stake in the Odyssey channel is acquired.
1999:
A line of 99-cent greeting cards is introduced under the Warm Wishes brand; DaySpring Cards and The picture People are acquired; company launches a ten-year strategic plan, aiming to triple revenues by 2010, to $12 billion.
2000:
A partial offering of stock in Crown Media Holdings Inc. is completed.
2001:
The Odyssey channel is relaunched as the Hallmark Channel.

The reason for Hallmarks decline rested in the very backbone of its empirethe specialty card and gift shops that sold the Hallmark brand, which by the early 1990s numbered more than 10,000. Over a long period, these shops had fallen victim to changing buying patterns in particular among women, who still bought 90 percent of all cards sold. Pressed for time, more and more consumers were opting to purchase cards at one-stop shopping outletssupermarkets, drugstore chains, and large discounterssuch as Wal-Mart. In the early 1970s more than half of all cards were sold in specialty shops; by the early 1990s only about 30 percent were. American Greetings and Gibson, which did not have such extensive ties to the card shops, were able to recognize the trend and shift to accommodate it. Hallmark, however, was in a bind. Continuing to rely so heavily on specialty shops would do nothing to halt its market share decline, but it could not simply abandon the shops, for doing so would bankrupt many of them, not something a company as paternalistic as Hallmark could seriously consider.

One strategy was to diversify away from greeting cards even further. In 1990 Hallmark acquired Willitts Designs, a maker of collectibles, but then sold the company only three years later. Likewise, Hallmarks venture into Spanish-language television was abandoned in 1992 at a loss of $10 million when Uni vision was sold to Grupo Televisa. Cable television was Hallmarks next foray with the 1991 formation of a Crown Media Inc. subsidiary to which was added Cenom Cable in St. Louis, through the purchase of a controlling interest for $1 billion. In 1994 this venture too was cast aside when Hallmark sold Crown Media to Charter Communications Inc. for $900 million.

During this period Hallmark also updated its product line, offering a more high-tech approach to card purchasing. In 1991 the Personalize it! in-store kiosk was introduced (later called Touch-Screen Greetings), through which customers were able to create computer-generated personalized greeting cards. The following year Hallmark filed suit for infringement of its kiosk patent against American Greetings and its Creata-Card kiosk. The suit was settled in 1995 with each company receiving a worldwide, nonexclusive license to use the technology; no other details on the settlement were provided at that time.

Moreover, in 1994, Hallmark developed recordable greeting cards in partnership with Information Storage Devices. Initially retailing for $7.95 each, these cards allowed the sender to record his personal message, which would then play back each time the card was opened. Also in 1994 came the debut of the Hallmark Gold Crown Card, a frequent-buyer reward program for customers at selected Hallmark retail stores. Two years later, the Hallmark stores participating in the reward program were rebranded under the Hallmark Gold Crown name through a $100 million remodeling program in which the stores were also provided with a fresh look. In addition to the frequent-buyer program, the Gold Crown stores differed from regular Hallmark stores in several respects; they had their own lines of cards and exclusive merchandise, and they were all owned by individuals and were not franchises.

In the face of declining profits brought on by declining market share, Hallmark went through a series of reengineering and restructuring efforts in the early 1990s in an attempt to hold costs down. U.S. and Canadian operations were consolidated, and a 1995 restructuring brought together for each Hallmark card brand its administrative, marketing, and product development functions.

Additional diversification moves in the area of entertainment were made in the mid-1990s. In 1994 Hallmark acquired RHI Entertainment Inc. for $365 million. RHI was the television production company responsible for Hallmarks Hall of Fame productions. Hallmark thus acquired the worlds leading producer of family-oriented entertainment, which it promptly renamed Hallmark Entertainment, Inc. and set up as a subsidiary of Hallmark Cards. Then in 1995, Hallmark purchased a 9.9 percent stake in European broadcaster Flextech for $80 million. Flextech and Hallmark created a family-oriented international cable television network, the Hallmark Entertainment Network, which commenced operations in Ireland and the United Kingdom in 1996. Next, Hallmark Entertainment, Inc. teamed up with the Jim Henson Company in 1998 to launch the Kermit Channel, a pay television channel featuring general family entertainment fare. Also in 1998, Hallmark purchased a significant stake in the Odyssey channel, a cable network that had been launched in 1988 as a religious channel and that was in the process of being transformed into a family-oriented entertainment channel.

Given the uneven success of Hallmarks other ventures, greeting cards remained the companys most important endeavor. New promotions of Hallmark cards in the mid-1990s included a sneak-a-peek advertising campaign, comprising a series of commercials in which people were caught looking at the backs of the cards they had received, just to make sure they were Hallmarks. Continuing to seek ways to reverse the decline in its share of the greeting card market, the Hallmark brand was introduced into the mass merchandiser market for the first time with the 1997 launch of Expressions from Hallmark. The cards featured the Hallmark logo on the back and were initially marketed though more than 5,000 discounters, supermarkets, and drugstores. This move angered many owners of Hallmark retail stores, who feared that their sales would suffer. In 1999 came the debut of yet another new line called Warm Wishes, which featured cards priced at 99 cents and aimed at increasingly value-conscious consumers. The Warm Wishes line debuted in more than 17,000 retail outlets across the United States. The new initiatives appeared to be working, as Hallmark reported that its share of greeting card sales in the U.S. retail market increased from 47 percent in 1997 to 51 percent in 1998 to 52 percent in 1999.

Although the company had been involved in the online world in various ways since the mid-1980s, Hallmarks first serious move into the Internet came in 1996 with the launch of its corporate web site, hallmark.com. Primarily offering corporate news and product information, the site did offer some early versions of free electronic greeting cards (or e-cards). In November 1997 an overhauled hallmark.com went live with a much more extensive selection of free e-cards, some e-cards that sold for $1.50, and new e-commerce features, such as the online retailing of gift products, including jewelry, flowers, and stuffed animals. In late 1999 Hallmark began offering all of its e-cards free of charge.

The pace of acquisitions quickened in the late 1990s as Hallmark continued to diversify. In 1997 the company purchased William Arthur, Inc., a West Kennebunk, Maine-based maker of customized and prepackaged stationery products. Overseas growth was pursued as well in response to U.S. greeting card sales being flat for several years. Hallmark in 1998 acquired Creative Publishing plc, a leading U.K. maker of boxed and seasonal cards, for about $310 million. Creative was merged into the companys existing U.K. business, which was renamed Hallmark Cards (Holdings) UK. The purchase of Creative increased Hallmarks share of the U.K. greeting card market to nearly 30 percent, making it the number one player there. Hallmark similarly expanded in France in 1998 through the purchase of Editions DALIX. Two more acquisitions were completed in the United States in 1998: Bloomington, Indiana-based Inter Art Holding Corporation, maker of high-quality greeting cards and related products whose product line included items designed by artist Mary Engelbreit; and Tapper Candies, a maker of candy, toys, and party favors based in Cleveland. During 1999 Hallmark acquired DaySpring Cards, Inc., the leading creator of Christian personal expression products. Adding the Siloam Springs, Arkansas-based DaySpring provided Hallmark with increased access to the fast-growing Christian card market. A second acquisition in 1999 brought The picture People into the Hallmark fold. Based in Foster City, California, The picture People operated a national chain of mall-based portrait studios.

In mid-1999 Hallmark launched an ambitious ten-year strategic plan, aiming to triple revenues by 2010, to $12 billion. The company planned to remain centered around its core greeting card business, but would also pursue growth and expansion in five additional business platforms: caring gift solutions, memories, life celebrations, personal development, and family entertainment. Subsequent developments in greeting cards included the launch of Hallmark en Español, a line of more than 1,000 Spanish-language greeting cards; the introduction of Hallmark Fresh Ink, a line of hipper, sometimes risque cards aimed at women between the ages of 18 and 39; and the signing of Maya Angelou to a licensing deal to develop cards and specialty gifts featuring newly written poetry and sentiments from the poet laureate. As the 21st century began, Hallmark had to contend with an enlarged competitor in the form of American Greetings, which purchased the number three card company, Gibson Greetings, in 2000. According to Ashlea Ebeling writing in Forbes, the market share battle had now grown even tighter, with Hallmark holding 45 percent of the U.S. card market and American controlling 40 percent.

In the area of family entertainment, meantime, Hallmark in May 2000 made a partial offering of stock in Crown Media Holdings Inc., a subsidiary of Hallmark Entertainment that operated and distributed the Hallmark Entertainment Network, the Kermit Channel, and the Odyssey channel. Hallmark retained a 49.1 percent stake in Crown Media and 90 percent of its voting rights. In 2001 Odysseys name was changed to the Hallmark Channel, and the network began stepping up its showings of Hallmark Hall of Fame productions. Crown Media also began rebranding its Hallmark Entertainment Network outlets located outside the United States under the Hallmark Channel name.

Principal Subsidiaries

Binney & Smith Inc.; Crown Center Redevelopment Corporation; DaySpring Cards, Inc.; Gift Certificate Center; Hallmark Entertainment, Inc.; Hallmark International; Halls Merchandising, Inc.; InterArt Holding Corporation; Irresistible Ink; Litho-Krome Company; The picture People; Tapper Candies; William Arthur, Inc.; Hallmark Cards Australia Ltd.; Binney & Smith Ltd. (Canada); Hallmark Cards Canada; Hallmark Group France, S.A.; Hallmark Mexicana, S. de R.I. de C.V. (Mexico); Hallmark Cards Nederland B.V. (Netherlands); Uitgeverij Spanjersberg B.V. (Netherlands); Verkerke Reprodukties, N.V. (Netherlands); Hallmark Cards New Zealand Ltd.; Hallmark Cards Iberica, S.A. (Spain); Hallmark Cards (Holdings) UK.

Principal Competitors

American Greetings Corporation; CSS Industries, Inc.; Amscan Holdings, Inc.; Factory Card Outlet Corp.; Thomas Nelson, Inc.; Blue Mountain Arts, Inc.

Further Reading

Beatty, Sally, Hallmark, Media Firms Pool Interests to Build Network, Wall Street Journal, July 5, 2000, p. B4.

Chandler, Susan, Can Hallmark Get Well Soon?, Business Week, June 19, 1995, pp. 6263.

Coleman, Calmetta Y., Hallmark to Buy U.K. Card Firm for $310 Million, Wall Street Journal, July 10, 1998, p. B4.

Ebeling, Ashlea, Wild Card, Forbes, November 13, 2000, pp. 2501.

Fitzgerald, Kate, Hallmark Alters Focus As Lifestyles Change, Advertising Age, October 25, 1994, p. 4.

Flint, Joe, Odyssey Cable Network to Change Its Name to Hallmark Channel, Wall Street Journal, March 29, 2001, p. B15.

Frazier, Mya, Battle for Retail Real Estate: American Greetings, Hallmark Duke It Out in $7 Billion Industry, Cleveland Plain Dealer, November 8, 2000, p. 1C.

From Someone Who Loves You, Economist, August 10,1991, p. 63.

Fuller, Jennifer Mann, Going for the Gold: Hallmark Cards Makes Strong Investment to Ensure Success of Its 4,800-Store Network, Kansas City Star, December 17, 1997, p. B1.

Hall, Joyce C., with Curtiss Anderson, When You Care Enough, Kansas City, Mo.: Hallmark, 1979, 269 p.

Hamilton, Martha M., Floral Retailers Bunch Up in a Crowded Field: Is There Room to Bloom for New Competitors?, Washington Post, February 12, 2000, p. E1

Hayes, David, Cyber Greetings: Sending Instant Holiday Cards Is Just a Click Away, Kansas City Star, December 21, 1996, p. B1.

Helliker, Kevin, Hallmark Finds Another Market Niche: The Sorrowful, Wall Street Journal, December 24, 1998, p. B1.

Hirshey, Gerri, Happy Day to You, New York Times Magazine, July 2, 1995, pp. 20+ .

Howard, Elizabeth G., Hallmarks $4 Billion Formula, Kansas City Business Journal, June 16, 1995, p. 17.

Kinni, Theodore B., The Reengineering Rage, Industry Week, February 7, 1994, p. 11.

Mann, Jennifer, Angelou, Hallmark Team Up, Kansas City Star, November 14, 2000, p. D4.

, Greeting Card Firms in Patent Dispute: Suits Come and Go Between Hallmark, American Greetings, Kansas City Star, February 1, 2001, p. C1.

, Hallmark Attacking Competitor over Technology: Web Site for American Greetings Corp. Is Focus of Lawsuit, Kansas City Star, June 3, 2000, p. C1.

, Hallmark Plans Buyout in U.K., Kansas City Star, July 10, 1998, p. A1.

, Hallmark to Start a Site for Retailers: Ebizmix.com Has Already Lined Up 70 Suppliers, Kansas City Star, June 7, 2000, p. C1.

, Progress Is Slow for Hallmark.com: Web Site Has Plenty of Visitors So Far, but Few Purchases, Kansas City Star, June 13, 2000, p. E9.

Nelson, Emily, Dearest Mom, Greetings from My CD-ROM, Wall Street Journal, September 4, 1996, p. B1.

Orenstein, Susan, Roses Are Red, Violets Are Blue, Hallmarks Online, but What Can It Do?, Industry Standard, November 20,2000.

Schiller, Zachary, and Ron Grover, And Now, a Show from Your Sponsor, Business Week, May 22, 1995, pp. 10002.

Stern, William M., Loyal to a Fault: Its Brand Name Is August, Its Profits a Wow! But Hallmark Cards Had Better Get with It Now!, Forbes, March 14, 1994, pp. 5859.

Weiner, Steve, Do They Speak Spanish in Kansas City?, Forbes, January 25, 1988, p. 46.

Young, Gordon, Card Sharks, Utne Reader, May/June 1993, p. 132.

Joan Harpham
updates: Douglas Sun and David E. Salamie

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"Hallmark Cards, Inc." International Directory of Company Histories. 2001. Encyclopedia.com. 24 Sep. 2016 <http://www.encyclopedia.com>.

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Hallmark Cards, Inc.

Hallmark Cards, Inc.

2501 McGee Street
Kansas City, Missouri 64108
U.S.A.
(816) 274-5111
Fax: (816) 274-8513

Private Company
Incorporated:
1923 as Hall Brothers Company
Employees: 19,600
Sales: $3.4 billion (1995 est.)
SICs: 2678 Stationery, Tablets & Related Products; 2679 Converted Paper & Paperboard Products, Not Elsewhere Classified; 2771 Greeting Card Publishing & Printing; 3952 Lead Pencils, Crayons & Artists Materials; 3999 Manufacturing Industries, Not Elsewhere Classified

Hallmark Cards, Inc. is the worlds largest greeting card company, creating 21,000 different designs each year in more than 20 languages, and distributing them in more than 100 countries. In addition to the Hallmark flagship, the company also markets cards under the Ambassador and Expressions brand names. Over the years, Hallmark has branched out into other areas of the stationery business, including writing paper, party goods, gift wrap, and photo albums, as well as into such giftware as plush toys, mugs, jigsaw puzzles, and Christmas ornaments. The companys Binney & Smith Inc. subsidiary specializes in personal skill development products, including Crayola crayons, Magic Markers, modeling material, creativity software, model kits, and art supplies for professionals and students. Hallmark also creates family-oriented television programming through its Hallmark Entertainment, Inc. subsidiary. Even with the firms diversification, the greeting card remains Hallmarks mainstayso much so that often Hallmark has been mistakenly credited with inventing it.

Early History

Hallmark was founded by Joyce C. Hall, a native of Norfolk, Nebraska, who as a teenager ran a postcard company with his older brothers. In 1910 Hall, still only 18, left the family business he had founded after a traveling salesman convinced him that Kansas City, Missouri, would serve him better as a wholesaling and distribution center. Almost immediately after arriving in Kansas City, Hall set up a mail-order postcard company in a small room at the Young Mens Christian Association, where he remained until his landlord complained about the volume of mail Hall was receiving. The new company was named Hall Brothers, a name justified the following year when Rollie Hall came to Kansas City to join his brother in the business.

At that time, picture postcards were all the rage in the United States, with the best ones imported from Europe. Very early on, however, Joyce Hall came to believe that the postcards appeal was quite limited. They were novelty items rather than a means of communication and, with the leisure time needed to write long letters diminishing and the long-distance telephone call still a rare phenomenon, people would need a shorthand way of reaching each other by mail. Greeting cards suggested themselves as a viable alternative, so in 1912 Hall Brothers added them to its product line.

The outbreak of World War I bore out Halls contention. The supply of postcards from Europe dried up, but domestic products were of inferior quality and their popularity waned. Greeting cards stepped into the breach. In 1914 Hall Brothers bought a small press and began publishing its own line of Christmas cards. In 1915 a fire destroyed the companys entire inventory, putting it $17,000 in debt, but Joyce and Rollie Hall rebuilt the business. In 1921 they were joined by their brother William Hall. By 1922 Hall Brothers had recovered to the point where it was employing 120 people, including salespeople in all 48 states. Also that year, it diversified for the first time and started selling decorative gift wrap.

In 1923 the company formally incorporated under the name Hall Brothers Company. Over the next two decades, it would attack its market aggressively through advertising. In 1928 Hall Brothers became the first greeting card company to advertise nationally when it took out an ad in Ladies Home Journal. In 1936, with the national economy emerging from the worst of the Great Depression, Hall Brothers went on the attack again, introducing an open display fixture for greeting cards that Joyce Hall had developed with the help of an architect. Previously, cards had always been kept under store counters, out of customers sight and usually in a disorganized state. In 1938 Hall Brothers advertised in the broadcast medium for the first time when it began sponsoring Tony Wons Radio Scrapbook on WMAQ radio in Chicago.

When the United States entered World War II, the company pitched an appeal to friends and loved ones of military personnel with the slogan Keep em happy with mail. Hall Brothers would find its most famous and enduring slogan in 1944, however, when it started using the tagline When you care enough to send the very best, which had been suggested a few years earlier by sales and advertising manager Ed Goodman. After the war, a staff artist created the companys logo, consisting of a five-pointed crown and the Hallmark name in script letters. Hall Brothers took out a copyright on the logo in 1949.

Expansion in the 1950s and 1960s

The company established another landmark in advertising on Christmas Eve 1951, when it sponsored a television production of Gian Carlo Menottis opera Amahl and the Night Visitors. This was the first of the famous Hallmark Hall of Fame series, which two years later presented a production of Hamlet starring the noted British Shakespearean actor Maurice Evans. That broadcast marked the first time the entire play had ever been seen on U.S. television. As Joyce Hall himself once said, Good taste is good business.

Also in the early 1950s, Hall Brothers began opening the first of thousands of retail shops specializing in Hallmark cards. In 1954 the company changed its name to Hallmark Cards, Inc., having already used Hallmark as a brand name for 31 years. In 1959 the company introduced its Ambassador Cards line to tap into the lucrative market presented by shoppers at mass merchandisers such as supermarkets, discount stores, and drugstores. The next year Hallmark introduced its own line of party decorations and began featuring characters from Charles M. Schulzs Peanuts comic strip on its products.

In 1966, Joyce Hall retired as president and CEO of the company he had founded. Handing the reins to his son, Donald Hall, Joyce Hall nevertheless remained active in company affairs as chairman until his death in 1982. Joyce Hall was not only a wealthy and successful businessman when he died, but also a member of the French Legion of Honor and a commander of the British Empire. He had been friends with British Prime Minister Winston Churchill and with U.S. Presidents Harry Truman and Dwight Eisenhower. For the latter Hall Brothers custom-designed an official presidential Christmas card in 1953.

One of Donald Halls first important moves as CEO of Hallmark was to acquire Springbok Editions, maker of jigsaw puzzles, in 1967. The next year, the company broke ground on the Crown Center, a $500 million retail, commercial, and residential complex intended to revitalize an area near downtown Kansas City and financed entirely with company funds. Hallmark created a new subsidiary, Crown Center Redevelopment Corporation, to oversee it.

1980s Acquisitions

In 1979 Hallmark acquired Georgia-based lithographer Litho-Krome Corporation. In 1981 the company formed a division, Hallmark Properties, to create and administer licensing projects. This division went on to create Hallmarks Rainbow Brite, Purr-Tenders, and Timeless Tales character merchandise, and also oversaw the companys licenses for Peanuts and Garfield cartoon characters.

After his fathers death in 1982, Donald Hall added the chairmanship to his duties as CEO. In 1984 Hallmark acquired Binney & Smith, the Pennsylvania-based maker of Crayola crayons and Liquitex art materials. In 1986 Donald Hall retired as CEO and handed the post to president Irvine O. Hockaday Jr.

In 1987 Hallmark, after being a prominent advertiser in the broadcast media for many years, became an owner as well when it acquired a group of Spanish-language television stations from Spanish International Communication. The next year, it added another station purchased from Bahia de San Francisco Television. Also in 1988, Hallmark acquired a Spanish-language network, Univision, and amalgamated all of its holdings in a subsidiary, Univision Holdings. Based in New York, the subsidiary ran the nine full-power stations under the name Univision Station Group.

During the mid-1980s small greeting card companies began competing for Hallmarks market position with a diverse array of cards that became favorites. In the mid-1980s Hallmark fought back with its Personal Touch and Shoebox Greetings series. Many of these cards, however, bore a resemblance to rival designs that some found too striking. In 1986 Blue Mountain Arts, which produced non-occasion cards featuring poetry and pastel illustrations to produce a concentrated emotional effect, sued Hallmark for copyright and trade dress infringement and unfair competition. The initial decision went against Hallmark, which appealed ultimately to the Supreme Court. When the Supreme Court refused to hear the case in 1988, Hallmark agreed to discontinue its Personal Touch line. Financial terms of the settlement were not disclosed.

Company Perspectives

Hallmark aspires to enrich peoples lives and enhance their relationships. Beyond products and services, the company funds the Hallmark Corporate Foundation, which benefits human service, education, health and arts organizations in the communities in which Hallmark operates. In partnership with Boys & Girls Clubs of America, 4-H Youth Development Education and Girl Scouts of the U.S.A., the Foundation produces Talking with T.J., a video series that helps youngsters develop essential social skills. Additionally, Hallmark sponsors Kaleidoscope, a creative workshop for youngsters.

1990s and Beyond

Hallmarks biggest challenge during the early 1990s was confronting its continuing loss of market share to the number two and three companies in the greeting card industry, American Greetings Corp. and Gibson Greetings, Inc., respectively. From 1990 to 1995, it was estimated that Hallmarks market share fell from 50 to 45 percent. Some industry experts even suggested that American Greetings would overtake Hallmark sometime between 1999 and 2004.

The reason for Hallmarks decline rested in the very backbone of its empirethe specialty card and gift shops that sold the Hallmark brand, which by the early 1990s numbered more than 10,000. Over a long period, these shops had fallen victim to changing buying patterns in particular among women, who still bought 90 percent of all cards sold. Pressed for time, more and more consumers were opting to purchase cards at one-stop shopping outletssupermarkets, drugstore chains, and large discounterssuch as Wal-Mart. In the early 1970s more than half of all cards were sold in specialty shops; by the early 1990s only about 30 percent were. American Greetings and Gibson, which did not have such extensive ties to the card shops, were able to recognize the trend and shift to accommodate it. Hallmark, however, was in a bind. Continuing to rely so heavily on specialty shops would do nothing to halt its market share decline, but it could not simply abandon the shops for the discounters; doing so could bankrupt many of them, not something a company as paternalistic as Hallmark could seriously consider.

One strategy was to diversify away from greeting cards even further. In 1990 Hallmark acquired Willitts Designs, a maker of collectibles, but then sold the company only three years later. Likewise, Hallmarks venture into Spanish-language television was abandoned in 1992 at a loss of $10 million when Univision was sold to Grupo Televisa. Cable television was Hallmarks next foray with the 1991 formation of a Crown Media Inc. subsidiary to which was added Cenom Cable in St. Louis, through the purchase of a controlling interest for $1 billion. In 1994 this venture too was cast aside when Hallmark sold Crown Media to Charter Communications Inc. for $900 million.

During this period Hallmark also updated its product line, offering a more high tech approach to card purchasing. In 1991 the Personalize it! in-store kiosk was introduced (later called Touch-Screen Greetings), through which customers were able to create computer-generated personalized greeting cards. The following year Hallmark filed suit for infringement of its kiosk patent against American Greetings and its Creata-Card kiosk. The suit was settled in 1995 with each company receiving a worldwide, nonexclusive license to use the technology; no other details on the settlement were provided at that time.

Moreover, in 1994, Hallmark developed recordable greeting cards in partnership with Information Storage Devices. Initially retailing for $7.95 each, these cards allowed the sender to record his personal message, which would then play back each time the card was opened. The following year, Hallmark moved into the burgeoning area of online marketing by offering its greeting cards on America Online. The company planned additional such ventures for other online services.

In the face of declining profits brought on by the declining market share, Hallmark went through a series of reengineering and restructuring efforts in the early 1990s in an attempt to hold costs down. United States and Canadian operations were consolidated and a 1995 restructuring brought together for each Hallmark card brand its administrative, marketing, and productdevelopment function.

Additional diversification moves were taken in the mid-1990s in the field of entertainment. In 1994 Hallmark acquired RHI Entertainment Inc. for $365 million. RHI was the television production company responsible for Hallmarks Hall of Fame productions. Hallmark thus acquired the worlds leading producer of family-oriented entertainment, which it promptly renamed Hallmark Entertainment, Inc. and set up as a subsidiary of Hallmark Cards. Then in 1995, Hallmark purchased a 9.9 percent stake in European broadcaster Flextech for $80 million. Flextech and Hallmark will create a family-oriented cable television network, the Hallmark Entertainment Network, which was slated to commence operations in Ireland and the United Kingdom in 1996.

Given the uneven success of Hallmarks noncore ventures, greeting cards remained the companys most important endeavor. New promotions of Hallmark cards in the mid-1990s included a sneak-a-peek advertising campaign, comprising a series of commercials in which someone is caught looking at the back of the card he was just given, just to make sure it was a Hallmark. The company also announced plans to introduce a new brand name in 1997, Expressions by Hallmark. Heading into the 21st century, Hallmark was a market leader at a crossroads. According to some analysts, the companys decisions regarding its distribution options would likely go a long way toward determining future success.

Principal Subsidiaries

Binney & Smith Inc.; Crown Center Redevelopment Corporation; Graphics International Inc.; Hallmark Entertainment, Inc.; Hallmark International; Halls Merchandising, Inc.; Litho-Krome Co.; Hallmark Cards Australia Ltd.; Binney & Smith (Canada) Ltd.; Hallmark Canada; Hallmark Cards Inc.-French Branch; Hallmark Cards GmbH (Germany); Hallmark Cards Ireland Ltd.; Hallmark de Mexico, S.A. de C.V.; Spanjersburg (Netherlands); Verkerke Reprodukties, N.V. (Netherlands); Hallmark Cards NZ Ltd. (New Zealand); Hallmark Cards Ibérica, S.A. (Spain); Hallmark Cards Ltd., European Div. (U.K.); W. N. Sharpe Ltd. (U.K.); Valentines of Dundee, Ltd (U.K.).

Further Reading

Chandler, Susan, Can Hallmark Get Well Soon?, Business Week, June 19, 1995, pp. 62-63.

Fitzgerald, Kate, Hallmark Alters Focus as Lifestyles Change, Advertising Age, October 25, 1994, p. 4.

From Someone Who Loves You, Economist, August 10,1991, p. 63.

Hall, Joyce C, with Curtiss Anderson, When You Care Enough, Kansas City, Mo.: Hallmark, 1979, 269 p.

Hirshey, Gerri, Happy [ ] Day to You, New York Times Magazine, July 2, 1995, pp. 20 +.

Howard, Elizabeth G., Hallmarks $4 Billion Formula, Kansas City Business Journal, June 16, 1995, p. 17.

Kinni, Theodore B., The Reengineering Rage, Industry Week, February 7, 1994, p. 11.

Schiller, Zachary, and Ron Grover, And Now, a Show from Your Sponsor, Business Week, May 22, 1995, pp. 100-02.

Stern, William M, Loyal to a Fault: Its Brand Name is August, Its Profits a Wow! But Hallmark Cards Had Better Get with It Now!, Forbes, March 14, 1994, pp. 58-59.

Weiner, Steve, Do They Speak Spanish in Kansas City?, Forbes, January 25, 1988, p. 46.

Young, Gordon, Card Sharks, Utne Reader, May/June 1993, p. 132.

Joan Harpham and Douglas Sun

updated by David E. Salamie

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"Hallmark Cards, Inc." International Directory of Company Histories. 1997. Encyclopedia.com. 24 Sep. 2016 <http://www.encyclopedia.com>.

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Hallmark Cards, Inc.

Hallmark Cards, Inc.

2501 McGee Street
Kansas City, MO 64108

(816)274-SlI
www.hallmark.com

When three brothers decided to get into the greeting card business more than ninety years ago, very few people exchanged cards. Today, greeting cards have become big business with Hallmark Cards, Inc. leading the pack. Hallmark produces almost four billion cards a year, nearly half of all cards sold in the United States. Contributing to sales is the fact that the company "invented" dozens of holidays, from Secretary's Day and Bosses Day to Grandmother's Day and Mother-in-Law Day, with a line of cards especially designed for each event. There are even cards for your pet's birthday and electronic cards that play music.

From Postcards to Greeting Cards

Hallmark first began in 1910 when founder Joyce C. Hall started selling postcards from his room at the YMCA in Kansas City, Missouri. He moved the business into a rented office later that year after the YMCA complained about the large volume of mail he was generating. In 1911, he and his two brothers, William and Rollie, formed Hall Brothers. The brothers started selling greeting cards in 1912 as the popularity of postcards began to decline. Two years later, the company began designing its own cards, creating twenty engraved Christmas card designs. But disaster struck in 1915 when a fire destroyed their office and their entire inventory, including unfulfilled Valentine card orders, leaving the company $17,000 in debt.

The brothers quickly rebounded, setting up shop in a new office with their own engraving presses on which they printed their own cards. In 1916, they opened their first retail store in Kansas City. The following year, Hall Brothers designed a humorous greeting card and began producing and selling the first Christmas gift-wrapping paper. In 1919, the company moved to a larger building in Kansas City to accommodate its growing workforce, which numbered twenty-five. They also introduced a line of friendship cards.

During the national prosperity of the 1920s, Hall Brothers rapidly expanded, adding several hundred employees, including more than a dozen full-time artists. The trademark name "Hallmark" first appeared on the back of cards in 1925. The product line expanded to include Christmas and other decorative seals, party invitations, birth announcements, calendars, and sympathy cards. Hallmark advertisements also appeared for the first time, in the Ladies Home Journal.

Hallmark at a Glance

  • Employees: 20,000
  • CEO: Donald J. Hall jr.
  • Subsidiaries: Binney & Smith, Inc.; Crown Center Redevelopment Corporation; Crown Media Holdings, Inc.; DaySpring Cards, Inc.; Gift Certificate Center; Hallmark Entertainment, Inc.; Halls Merchandising, Inc.; Image Arts; interArt; Irrestible Ink, Inc.; Litho-Krome Company; The Picture People; Tapper Candies, Inc.; William Arthur
  • Major Competitors: American Greetings; CSS Industries; Viacom; Blue Mountain Arts
  • Notable Products: Hallmark cards; Ambassador cards; Fresh Ink cards; Crayola crayons; Silly Putty; Portfolio Series arts materials; Hallmark Hall of Fame television programs; the Hallmark Channel

The Hallmark Way

The 1930s saw the company continue to grow, despite the worldwide economic depression. Hall Brothers began offering its employees benefits almost unheard of at the time, including retirement pensions, health care, life insurance, regular coffee breaks, and paid vacations. It was the start of Hallmark's philosophy that employees are the company's most valuable resource.

Timeline

1910:
Joyce C. Hall starts a wholesale postcard business in Kansas City, Missouri.
1911:
Hall Brothers is formed.
1915:
Hall Brothers begins printing their own greeting cards.
1919:
Friendship cards are introduced by the company.
1925:
The word "Hallmark" first appears on cards.
1932:
Hallmark licenses the rights to use Walt Disney characters.
1951:
The first Hallmark Hall of Fame television program airs.
1954:
Hall Brothers officially changes its name to Hallmark Cards, Inc.
1966:
Donald). Hall becomes president and CEO.
1977:
Irvine O. Hockaday joins the company's board of directors.
1982:
Joyce C. Hall dies at the age of ninety-one.
1984:
Hallmark acquires Binney & Smith, makers of Crayola crayons.
1996:
Hallmark Entertainment Network is formed.
2002:
Donald J. Hall Jr. becomes CEO, replacing Hockaday, who retires.

As a matter of fact, many corporate analysts attribute much of Hallmark's continued success to the way it treats its employees. Over the years, workers were offered a profit-sharing program and a stock ownership plan. The company is privately held, with employees owning about a quarter of the stock. Other current worker benefits include six months of unpaid parental leave, financial help in adopting children, and sick childcare leave. Hallmark often has made the top spot on several lists, including one compiled by Working Mother magazine that ranks the most admired and most employee-friendly companies in the United States.

Offering the Very Best

During the 1930s, W. E. Coutts Company became Hall Brothers' Canadian affiliate, or partner. The company also entered into a licensing deal with the Walt Disney Company (see entry) to feature such Disney characters as Mickey Mouse and Donald Duck on its cards. This was a first for both companies. In 1936, Hall Brothers again moved to a larger building in Kansas City to house its nearly eight hundred workers. It also introduced new products during the decade such as cellophane wrapping and silk-screen cards.

The company continued to thrive during the 1940s despite World War II (1939-45), opening manufacturing plants in Topeka and Leavenworth, Kansas. In 1944, Hall Brothers introduced its now famous slogan, "When you care enough to send the very best." It also began sponsoring the wartime radio show, "Meet Your Navy."

As American culture transferred from radio to television, Hallmark also made the jump. Hall, however, was not satisfied with the quality of television programming and decided that instead of just buying advertising spots, Hallmark would produce and sponsor its own shows. In 1951, Hallmark debuted Amahl and the Night Visitors, the first original opera created specifically for television. It marked the beginning of a series of television specials that later became the Hallmark Hall of Fame.

After nearly forty years of being known as Hall Brothers or Hallmark, the company officially changed its name to Hallmark Cards, Inc. in 1954. By the time the company turned fifty years old in 1960, Joyce Hall's son, Donald J. Hall, entered the ranks of company management as assistant to the president. In addition, the continued growth of Hallmark forced the company to move to larger headquarters in Kansas City to accommodate its workforce of more than four thousand, including 350 artists. Hallmark was producing four million cards a day, and introducing fifteen thousand new products and designs each year.

Cleaning House

The 1960s brought about changes in the corporate leadership of Hallmark, although the company remained a family affair. Donald J. Hall was named president and chief executive officer (CEO), replacing his father, Joyce, who remained chairman of the board of directors. Continued growth spurred the company to build a new manufacturing plant in Topeka, Kansas, and expand its Lawrence, Kansas, facility to 450,000 square feet. The company was also doing well globally, which led it to form a subsidiary, Hallmark International.

Critical Acclaim for Hallmark Hall of Fame

Upset with the quality of early television, Hallmark founder Joyce C. Hall decided to do something. In the early 1950s, he set about creating a series of programs based on some of history's most critically acclaimed books, stage plays, and operas. The first was the world premier presentation of the opera Amahl and the Night Visitors by Gian Carlo Menotti (1911-), which aired on Christmas Eve 1951. In 1953, Hallmark debuted William Shakespeare's Hamlet. It was the first time a Shakespeare play was aired on TV.

Although the series maintained a focus on the classics, it also expanded to include socially relevant stories written specifically for television. These intimate portraits included Teacher, Teacher (1969), the story of a mentally challenged youth, and My Name is Bill W. (1989), which tells the story of the founding of Alcoholics Anonymous. The program continues into the twenty-first century with such offerings as The Runaway (2000), about two boys dealing with racial prejudice in post-World War II Georgia, and Follow the Stars Home (2001), the story of a single mother raising a disabled child.

Over the years, the Hall of Fame original programs have won eighty-seven Emmy Awards, the highest honor given in television. Among the award-winning programs are jason and the Argonauts (2000) and the great sea epic Moby-Dick (1998), written by Herman Melville (1819-1891). The roster of stars that have appeared in Hallmark productions include Katharine Hepburn (1907-), Paul Newman (1925-), Sidney Poitier (1927-), and Tommy Lee Jones (1946-).

In the mid-1960s, Joyce Hall became concerned about the deteriorating conditions in the Kansas City neighborhood where Hallmark's corporate headquarters were located. When city officials failed to take notice Hall decided to act on his own. In 1966, he retired as CEO in order to devote more time to the issue. Two years later he began construction of the Crown Center, a residential, retail, and commercial real estate development designed to halt urban decay in the neighborhood.

Part of the complex, which included office space, opened in 1971. The first phase was fully completed in 1973 and included a shopping mall, Westin Crown Center Hotel, and the Crown Center Ice Terrace. The first phase of Crown Center's residential community was completed in 1976 with the opening of the San Francisco Tower Condominiums and Santa Fe Place Apartments.

New Blood

In 1986, after Donald Hall had been running the company for twenty years, Hallmark's board of directors thought it was time to select a CEO from outside the family. It turned to Irvine 0. Hockaday Jr., who had joined the company in 1977. When Hockaday was appointed CEO, it marked the first time that Hallmark did not have a Hall family member at the helm. Some industry observers believed that bringing in an outsider might cause friction among the company's old guard.

It seemed, however, that new blood was exactly what Hallmark needed. Hockaday was quickly accepted by the other top executives and led the company through one of its most dynamic periods. Under Hockaday, Hallmark went on a corporate buying binge, purchasing Litho-Krome, a printing company based in Columbus, Georgia, and The Specialty Press Ltd., an Australian greeting card manufacturer. It also bought Dawson Printing Company in New Zealand. The Litho-Krome acquisition gave the company a quality printing plant in the South. The other two purchases bolstered Hallmark's international presence, allowing the company to cut costs by producing cards directly in Australia and New Zealand.

The 1980s saw Hallmark continue to grow, helped by the purchase of Binney & Smith, Inc., makers of Crayola crayons, in 1984. The company also expanded its product line, introducing Shoebox Greetings, an offbeat line of cards aimed at young, hip adults, and Mahogany, greeting cards designed for African Americans.

Hallmark continued its buying spree into the 1990s when it acquired several more companies, including Mundi-Paper, a Spanish greeting card manufacturer, and RHI Entertainment, a television programming and distribution firm. In 1996, RHI was renamed the Hallmark Entertainment Network, and given the mission to produce and distribute miniseries and movies made for television, including programs for the Hallmark Hall of Fame. It also operated the Hallmark Channel, a twenty-four-hour cable network dedicated to family programming. Other acquisitions during the 1990s included William Arthur, a producer of stationery products; Irresistible Ink, Inc., a direct-mail company; Tapper Candies of Cleveland, Ohio; and DaySpring Cards, Inc., an Arkansas-based maker of Christian-themed greeting cards.

Back in the Family

Hallmark made a change in leadership in 2002 when Donald J. Hall Jr. was named president and CEO, replacing Hockaday, who retired. The move came after the company experienced a drop in revenues from $4.3 billion in 2000 to $4 billion in 2001. For the first time in sixteen years, a member of the Hall family was again at the reins, and industry observers watched to see if Hall Jr. could do the job. "Skill set is really the measure here," said Paul Karofsky of Northeastern University's School of Business in a 2001 Chief Executive article. "And there's an obligation of family to perform to a higher standard."

Hallmark Wrangles with
Blue Mountain

Hallmark ran into legal problems in 1986 when greeting card creator Susan Polis Schutz and her husband Stephen sued the company for copyright infringement. The couple, owners of Blue Mountain Arts of Boulder, Colorado, claimed Hallmark had been using their designs on its cards without permission or payment. The U.S. Supreme Court refused to hear the case in 1988, allowing a lower court ruling against Hallmark to stand. The company agreed to buy back hundreds of thousands of Schutzinspired cards from Hallmark retail shops and pay the couple an undisclosed amount. Writer Susan and artist Stephen founded Blue Mountain Arts in 1970 as a small specialty greeting card manufacturer. Today, although it still creates paper cards, Blue Mountain has become a household name thanks mostly to the popularity of its Web site www.bluemountain.com, where browsers can send free e-cards to friends and family.

The biggest competition Hallmark and other greeting card companies faced in the early twenty-first century was the Internet, where consumers could log on to such sites as www.bluemountain.com and send electronic greeting cards, often accompanied by music, for free. Another challenge was getting to know and understand the new card-buying public. According to a 1999 article in Time magazine, "Female [baby] boomers buy cards, but they're quite diverse in sensibility and ethnicity, so the one-size-fits-all approach isn't working." The article further commented that, "For Generations X and Y, paper cards may as well be stone tablets."

To counteract this shift, Hallmark introduced a line of ninety-nine-cent cards to attract customers who were put off by growing paper card price tags. The company also added electronic card and gift options to its Internet site. In addition, Hallmark tended to rely less on its ten thousand retail shops (most run as independent franchises) and more on large discount chains, such as Kmart and Wal-Mart (see entries), and supermarkets and drugstore chains. But regardless of whether the cards are paper or electronic, or are sold in a small specialty shop or a mass-market chain, Hallmark is likely to remain the leader in the greeting card industry. It will do so because of its philosophy toward its employees and customers, which can be summed up in the verse that appeared on the very first Hallmark card in 1916: "I'd like to be the kind of friend you are to me."

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"Hallmark Cards, Inc." Leading American Businesses. 2003. Encyclopedia.com. 24 Sep. 2016 <http://www.encyclopedia.com>.

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Hallmark Cards, Inc.

Hallmark Cards, Inc.

2501 McGee Street
Kansas City, Missouri 64108
U.S.A.
(816) 274-5111
Fax: (816) 274-5061

Private Company
Incorporated:
1923 as Hall Brothers Company
Employees: 22,000
Sales: $2.70 billion

Hallmark Cards, Inc. is the worlds largest greeting card company, publishing more than 11 million cards a day in more than 20 languages, and distributing them around the world. Over the years, it has branched out into other areas of the stationery business, including writing paper, party goods, gift wrap, and albums. It also makes Crayola crayons, plush toys, mugs, jigsaw puzzles, and Christmas ornaments; but the greeting card has always been Hallmarks mainstayso much so that often Hallmark has been mistakenly credited with inventing it.

Hallmark was founded by Joyce C. Hall, a native of Norfolk, Nebraska, who as a teenager ran a postcard company with his older brothers. In 1910 Hall, still only 18, left the family business he had founded after a traveling salesman convinced him that Kansas City, Missouri, would serve him better as a wholesaling and distribution center. Almost immediately after arriving in Kansas City, Hall set up a mail-order postcard company in a small room at the Young Mens Christian Association, where he remained until his landlord complained about the volume of mail Hall was receiving. The new company was named Hall Brothers, a name that Rollie Hall justified the next year when he came to Kansas City to join his brother.

At that time, picture postcards were all the rage in the United States, with the best ones imported from Europe. Very early on, however, Joyce Hall came to believe that the postcards appeal was quite limited. They were novelty items rather than a means of communication and, with the leisure time needed to write long letters diminishing and the longdistance telephone call still a rare phenomenon, people would need a shorthand way of reaching each other by mail. Greeting cards suggested themselves as a viable alternative, so in 1912 Hall Brothers added them to its product line.

The outbreak of World War I bore out Halls contention. The supply of postcards from Europe dried up, but domestic products were of inferior quality and their popularity waned. Greeting cards stepped into the breach. In 1914 Hall Brothers bought a small press and began publishing its own line of Christmas cards. In 1915 a fire destroyed the companys entire inventory, putting it $17,000 in debt, but Joyce and Rollie Hall rebuilt the business. In 1921 they were joined by their brother William Hall. By 1922 Hall Brothers had recovered to the point where it was employing 120 people, including salesmen in all 48 states. Also that year, it diversified for the first time and started selling decorative gift wrap.

In 1923 the company formally incorporated under the name Hall Brothers Company. Over the next two decades, it would attack its market aggressively through advertising. In 1928 Hall Brothers became the first greeting card company to advertise nationally when it took out an ad in Ladies Home Journal. In 1936, with the national economy emerging from the worst of the Great Depression, Hall Brothers went on the attack again, introducing an open display fixture for greeting cards that Joyce Hall had developed with the help of an architect. Previously, cards had always been kept under store counters, out of customers sight and usually in a disorganized state. In 1938 Hall Brothers advertised in the broadcast medium for the first time when it began sponsoring Tony Wons Radio Scrapbook on WMAQ radio in Chicago.

When the United States entered World War II, the company pitched an appeal to friends and loved ones of military personnel with the slogan, Keep em happy with mail. Hall Brothers would find its most famous and enduring slogan in 1944, however, when it started using When you care enough to send the very best, which had been suggested a few years earlier by sales and advertising manager Ed Goodman. After the war, a staff artist created the companys logo, which consists of a five-pointed crown and the Hallmark name in script letters. Hall Brothers took out a copyright on the logo in 1949.

The company established another landmark in advertising on Christmas Eve 1951, when it sponsored a television production of Gian Carlo Menottis opera Amahl and the Night Visitors. This was the first of the famous Hallmark Hall of Fame series, which two years later presented a production of Hamlet starring the noted British Shakepearean actor Maurice Evans. That broadcast marked the first time the entire play had ever been seen on U.S. television. As Joyce Hall himself once said, Good taste is good business.

Also in the early 1950s, Hall Brothers began opening the first of thousands of retail shops specializing in Hallmark cards. In 1954 the company changed its name to Hallmark Cards, Inc., having already used Hallmark as a brand name for 31 years. In 1959 the company introduced its Ambassador Cards line to tap into the lucrative market presented by shoppers at mass merchandisers like supermarkets, discount stores, and drugstores. The next year Hallmark introduced its own line of party decorations and began featuring characters from Charles M. Schulzs Peanuts comic strip on its products.

Joyce Hall retired as president and CEO of the company he had founded in 1966 and handed the reins to his son, Donald Hall, but remained active in company affairs as chairman until his death in 1982. Joyce Hall was not only a rich and successful businessman when he died, but also a member of the French Legion of Honor and a commander of the British Empire. He had been friends with British Prime Minister Winston Churchill and with U.S. Presidents Harry Truman and Dwight Eisenhower. For the latter Hall Brothers custom-designed an official presidential Christmas card in 1953.

One of Donald Halls first important moves as CEO of Hallmark was to acquire Springbok Editions, which makes jigsaw puzzles, in 1967. The next year, the company broke ground on the Crown Center, a $500 million retail, commercial, and residential complex intended to revitalize an area near downtown Kansas City and financed entirely with company funds. Hallmark created a new subsidiary, Crown Center Redevelopment Corporation, to oversee it. In 1981 a suspended walkway at the complexs Hyatt Regency hotel collapsed, killing 114 people and injuring more than 200. It was the worst structural collapse in the history of the United States. After an exhaustive investigation, an administrative law judge determined the structural-engineering firm was responsible for the collapse. Insurance companies for Hallmark paid approximately $140 million to victims.

In 1979 Hallmark acquired Georgia-based lithographer Litho-Krome Corporation. In 1981 the company formed a division, Hallmark Properties, to create and administer licensing projects. This division has created Hallmarks Rainbow Brite, the Purr-Tenders, and Timeless Tales merchandise, and also oversees the companys licenses for Peanuts and Garfield.

After his fathers death in 1982, Donald Hall added the chairmanship to his duties as CEO. In 1984 Hallmark acquired Binney & Smith, the Pennsylvania-based maker of Crayola crayons and Liquitex art materials. In 1986 Donald Hall retired as CEO and handed the post to president Irvine O. Hockaday Jr.

In 1987 Hallmark, after being a prominent advertiser in the broadcast media for many years, became an owner as well when it acquired a group of Spanish-language television stations from Spanish International Communication. The next year, it added another station purchased from Bahia de San Francisco Television. Also in 1988, Hallmark acquired a Spanish-language network, Univision, and amalgamated all of its holdings in a subsidiary, Univision Holdings. Based in New York, the subsidiary runs the nine full-power stations under the name Univision Station Group.

During the mid-1980s small greeting card companies began competing for Hallmarks market position with a diverse array of cards that have become favorites. In the mid-1980s Hallmark fought back with its Personal Touch and Shoebox Greetings series. Many of these cards, however, bore a resemblance to rival designs that some found too striking. In 1986 Blue Mountain Arts, which produces non-occasion cards that use poetry and pastel illustrations to produce a concentrated emotional effect, sued Hallmark for copyright and trade dress infringement and unfair competition. The initial decision went against Hallmark, which appealed ultimately to the Supreme Court. When the Supreme Court refused to hear the case in 1988, Hallmark agreed to discontinue the Personal Touch line. Financial terms of the settlement were not disclosed.

Critics agree that Hallmark missed the boat when it came to the alternative greeting card market and wound up paying for it. Nevertheless, the company maintained its place as the leader in the personal communications industry. Successful product-line introductions in the ensuing years have included Between You and Me; Just How I Feel; and To Kids With Love, the industrys first line of anyday cards for adults to send to children. Hallmark easily remains the leader in its industry.

Principal Subsidiaries:

Binney & Smith; Crown Center Redevelopment Corporation; Graphics International; Hallmark Marketing Corporation; Halls Merchandising Incorporated; Litho-Krome Corporation; Univision Holdings Incorporated.

Further Reading:

Stern, Ellen, The Very Best From Hallmark, New York, Harry N. Abrams, 1988.

Joan Harpham and Douglas Sun

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