QVC, Home Shopping Network to merge
John Malone is solidifying his hold on homeshopping channels.
His Liberty Interactive, which owns QVC, said Thursday that it would combine with its longtime rival, the Home Shopping Network,in a $2.1 billion deal.
The deal will put together the two home shopping television networks at a time of upheaval in the retail world. Amazon’s dominance in selling online has grown seemingly nonstop, while Walmart has made e-commerce a big priority with the purchases of startups like Jet and the clothing brand Bonobos.
With e-commerce ascendant, nearly everyone else in retailing, from venerable department stores to once-trendy clothiers like J. Crew, has been struggling to grow or even survive. A growing number of retailers have filed for bankruptcy protection.
Home-shopping television networks are not immune from the online competition. With their familiar pitches for impulse purchases of electronics, jewelry, makeup and fitness equipment, both QVC and HSN are grappling with ways forward. HSN’s sales declined 3 percent last year, while QVC’s have slowed.
Combining QVC and HSN, which also have substantial e-commerce operations, is meant to help them gain scale, combine resources and cut costs. QVC and HSN would remain stand-alone brands under a new QVC Group structure after the merger.
This being Malone, however, the deal has a few intricacies. The deal is an all-stock transaction, where Liberty Interactive is technically buying the 62 percent of HSN that it does not already own.
Liberty Interactive then plans to spin off its nonretail assets, including its stakes in the cable operator Charter and Liberty Broadband, and rename the remaining operations the QVC Group. That publicly traded company would comprise QVC, HSN and Zulily, the flash sale site that Liberty bought for $2.4 billion two years ago.
Such a spinoff is a classic Malone maneuver meant to avoid running up corporate taxes, since shareholders will receive shares in the newly christened QVC Group rather than a cash payout.