ITEM 5. Interests in Securities of the Issuer.

      (a)-(b): Hallmark Entertainment owns 36,486,543 shares of Common Stock, representing a beneficial ownership of 55.7% of the shares of Class A Common Stock that would be outstanding upon the conversion of the 30,670,422 shares of Class B Common Stock held by Hallmark Entertainment. Hallmark Entertainment shares voting and dispositive power over such shares with Hallmark Cards.

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      Hallmark Cards owns 75,000 shares of Class A Common Stock as to which Hallmark Cards has sole voting and dispositive power. Hallmark Cards shares voting and dispositive power over the 36,486,543 shares of Common Stock held by Hallmark Entertainment.

      The information requested by (a)-(b) of this Item 5 for each director and executive officer of Hallmark Cards and Hallmark Entertainment is set forth in Schedule II hereto and is incorporated herein by reference.

      (c): Hallmark Entertainment acquired 5,377,721 shares of Class A Common Stock within the past 60 days. Except as described in this Item 5(c), neither of the Reporting Persons, nor, to the best knowledge of the Reporting Persons, any of their directors or executive officers, has effected any transactions in shares of Common Stock during the past 60 days.

      (d): None

      (e): Not applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

      Henson Acquisition.   On July 27, 2001, Hallmark Entertainment acquired 5,377,721 shares of outstanding Class A Common Stock from Henson for an aggregate purchase price of $90 million in cash. This purchase was made pursuant to a Stock Purchase Agreement, dated as of July 24, 2001, by and between Henson and Hallmark Entertainment.

      Films Transaction.   Hallmark Entertainment Distribution has entered into a Purchase and Sale Agreement, dated as of April 10, 2001, with the Issuer (the “Purchase and Sale Agreement”). Pursuant to the Purchase and Sale Agreement, Hallmark Entertainment Distribution will receive consideration, including a number of shares of Class A Common Stock of the Issuer, in exchange for the transfer by Hallmark Entertainment Distribution to the Issuer of made-for-television movies, specials, theatrical films, mini-series, series and made-for-video product consisting of 702 titles, along with related film properties and rights (the “film assets”). The number of shares of Class A Common Stock included in the purchase price for the film assets is calculated as follows with the “average stock price” meaning the average of the closing price per share of the Class A Common Stock as reported on the Nasdaq National Market System on each trading day during the period beginning on November 6, 2000 (the date on which the Issuer publicly announced that it was investigating the possibility of a transaction) and ending on the trading date immediately prior to the closing date for the films transaction:

      1.   if the average stock price is less than $17.00, then 35,294,118 shares;

      2.   if the average stock price is greater than $18.70, then 32,085,562 shares; or

      3.   if the average stock price is at least $17.00, but not greater than $18.70, then the number of shares shall equal $600,000,000 divided by the average stock price.

      Based on an average stock price of $18.09 from November 6, 2000, to April 10, 2001, when the Purchase and Sale Agreement was signed, the Issuer would issue 33,169,794 shares.

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Of the shares issued in the transaction, 425,000 shares will be issued in escrow and will be returned to the Issuer if a proposed settlement of a lawsuit related to the films transaction becomes final.

      Amended and Restated Stockholders Agreement.   Hallmark Entertainment is a party to an Amended and Restated Stockholders Agreement, dated as of March 14, 2001, (the “Stockholders Agreement”) by and among Hallmark Entertainment, Liberty Media Corporation, Liberty Crown, Inc. VISN Management Corp., J.P. Morgan Partners (BHCA), L.P., [The Jim Henson Company, Inc.] and the Issuer. The Stockholders Agreement provides that the Issuer’s Board of Directors will consist of not less than 11 directors, with six nominated by Hallmark Entertainment, one nominated by each of Liberty Media Corporation, VISN Management Corp. and J.P. Morgan Partners (BHCA), L.P. and two independent directors who will not be officers or employees of any of the parties or their affiliates nominated by the Board of Directors. The rights of the parties to nominate a director will terminate on the later of (1) such party owning less than 5% of the Common Stock then outstanding or (2) such party ceasing to own at least 75% of the Common Stock such party owned immediately following the completion of the Issuer’s IPO.

      The parties to the Stockholders Agreement agree not to transfer more than 25% of the Common Stock owned by them immediately following the IPO until after the second anniversary of the Stockholders Agreement, except to their affiliates, another party to the Stockholder Agreement or their affiliates, to their executives under a stock-based compensation package, or in a transaction involving a merger, consolidation or business combination with, or sale of all of our common stock to, a third party that is not affiliated with the Issuer.

      In addition, the Stockholders Agreement provides that, in the event Hallmark Entertainment proposes to transfer 20% or more of the outstanding Common Stock to an unaffiliated third party, each other party to the Stockholders Agreement will have the right to participate on the same terms in that transaction with respect to the proportionate number of such other party’s shares. The Stockholders Agreement also provides that if the Issuer issues for cash an amount of the Common Stock, in either a public offering or private transaction, that causes Liberty Media Corporation and its affiliates to own, in the aggregate, less than 10% of the outstanding Common Stock, Liberty Media Corporation will have the right to purchase, at such public offering price or the average closing price of the Class A Common Stock over a five-day period prior to the closing of such private transaction, as applicable, an amount of the Class A Common Stock so as to restore its 10% ownership interest. Liberty Media Corporation must exercise such right not less than seven days prior to the closing of such issuance.

      Under the Stockholders Agreement, Hallmark Entertainment has the right to require the Issuer on four occasions, and the other parties, as a group, have the right to require the Issuer on two occasions, to register for sale the shares of the Common Stock they hold, so long as the number of shares they require the Issuer to register in each case is at least 7% of the Common Stock then outstanding. Hallmark Entertainment and the other parties also have an unlimited number of “piggy back” registration rights.

      The Stockholders Agreement also provides that the Issuer will be obligated to pay all expenses that result from the registration of Hallmark Entertainment’s and the other parties’

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      Common Stock under the Stockholders Agreement, other than registration and filing fees, attorneys fees, underwriter fees or expenses and underwriting discounts and commissions. The Issuer also agreed to indemnify such parties against any liabilities that may result from their sale of Common Stock, including Securities Act liabilities.

      Under the Stockholders Agreement, the Issuer also agreed that, for so long as the Issuer or any of its affiliates are entitled to have a representative on the Odyssey governance committee, and VISN Management Corp. and its affiliates either (a) are entitled to nominate to, or designate a member of, our Board of Directors or (b) beneficially own any preferred interests in Odyssey, then neither the Issuer nor any of its affiliates will, without the consent of the member of the Issuer’s Board of Directors nominated by VISN Management Corp. or a representative of the National Interfaith Cable Coalition, Inc., vote in favor of:

      The Issuer also agreed under the Stockholders Agreement not to transfer any of its interest in Odyssey prior to the second anniversary of the IPO without the consent of the VISN Management Corp. or the National Interfaith Cable Coalition, Inc. In addition, the Issuer agreed not to transfer any of its interests in Odyssey after the second anniversary of the IPO unless the

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transfer is conditioned on the requirement that the transferee assume the Issuer’s obligations described above. Under the terms of the Stockholders Agreement, the transferee’s obligations will generally expire on the later of (1) the fifth anniversary of the IPO, (2) the second anniversary of the transfer or (3) the repayment of VISN Management Corp.’s preferred interest in Odyssey, except that the obligations of the transferee will expire upon dissolution of Odyssey.

      The foregoing summary is qualified in its entirety by reference to the text of the Stockholders Agreement which is filed as an Exhibit hereto and hereby incorporated by reference.

ITEM 7. Material to be Filed as Exhibits.

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SIGNATURES

      After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

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SCHEDULE I

      The name and present principal occupation of each director and executive officer of Hallmark Cards, Incorporated and Hallmark Entertainment, Inc. are set forth below. The business address for the directors and executive officers of Hallmark Cards, Incorporated is c/o Hallmark Cards, Incorporated, 2501 McGee, Kansas City, Missouri 64108. The business address for the directors and executive officers of Hallmark Entertainment, Inc. is c/o Hallmark Entertainment, Inc., 1325 Avenue of the Americas, 21st Floor, New York, New York 10019. All the directors and executive officers listed on this Schedule I are United States citizens.

Hallmark Cards, Incorporated

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Hallmark Entertainment, Inc.

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SCHEDULE II

      To the knowledge of the Reporting Persons, listed below are the names of their executive officers and directors who beneficially own Common Stock of the Issuer, along with the number of shares each such person beneficially owns. To the knowledge of the Reporting Persons, the persons listed below are the only persons on Schedule I who beneficially own Common Stock. To the knowledge of the Reporting Persons, (a) each person listed below has the sole power to vote or direct to vote and dispose or direct to dispose those shares of Common Stock beneficially owned by such person and (b) each person beneficially owns shares of Common Stock representing less than 1% of the Class A Common Stock outstanding. Except as otherwise noted, each person acquired his/her shares of Class A Common Stock on May 9, 2000 at the time of the closing of the IPO at a price per share of $14.

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EXHIBIT INDEX