2 out­fits set deal to parry Ama­zon

Home-shop­ping net­works beef up

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM -

NEW YORK — QVC and Home Shop­ping Net­work, long known as a base for home shop­ping on TV, are com­bin­ing fur­ther to counter growth by Ama­zon and the on­go­ing shift by con­sumers to even more on­line buy­ing.

Lib­erty In­ter­ac­tive Corp., which owns QVC and al­ready owns 38 per­cent of Home Shop­ping Net­work, will buy the rest of Home Shop­ping Net­work for about $2.6 bil­lion in a stock deal.

Both QVC and Home Shop­ping Net­work had been deal­ing with slug­gish sales as Ama­zon dom­i­nates on­line shop­ping, though both had long moved be­yond the ca­ble chan­nels they were fa­mous for and were re­fash­ion­ing them­selves for shop­pers more ac­cus­tomed to buy­ing on their mo­bile phones. One con­cern has been whether they can draw enough younger shop­pers as they en­ter a higher-spend­ing mode.

In­te­grat­ing the com­pa­nies will make them “stronger than they are in­di­vid­u­ally and stronger yet as a stand­alone en­tity” in a “chang­ing and dif­fi­cult mar­ket,” said Greg Maf­fei, Lib­erty’s pres­i­dent and CEO.

Un­der for­mer Chief Ex-

● ec­u­tive Of­fi­cer Mindy Gross­man, the Home Shop­ping Net­work had worked to build its e-com­merce pres­ence and trans­form it­self into a life­style net­work. It de­rives half of its rev­enue from e-com­merce, fea­tur­ing more than 50,000 prod­ucts on its web­site along with broad­cast­ing to more than 90 mil­lion house­holds. Gross­man de­parted for Weight Watch­ers ear­lier this year.

Ex­ec­u­tives on Thurs­day high­lighted the po­ten­tial for cost sav­ings, com­ple­men­tary

but not wholly over­lap­ping cus­tomers, their strength in video and the larger reach the two will have. The com­pa­nies also said they hope to use Zulily, which QVC bought in 2015, to drive younger cus­tomers to both brands.

The com­bined com­pany will serve an es­ti­mated 23 mil­lion cus­tomers world­wide and ship more than 320 mil­lion pack­ages ev­ery year, said Mike Ge­orge, QVC’s pres­i­dent and CEO. QVC is stronger in fash­ion and beauty, he said, while cred­it­ing the Home Shop­ping Net­work for sales in elec­tron­ics, fit­ness and health.

He also said the com­pa­nies’ so­cial-me­dia pres­ence and in­creas­ing e-com­merce sales, with about $7.5 bil­lion, and $4.7 bil­lion in sales from mo­bile de­vices. In terms of video reach, the two will ac­cess more than 360 mil­lion TV homes glob­ally.

Among re­tail­ers who op­er­ate in mul­ti­ple cat­e­gories, Ge­orge said, the com­bined com­pany will be No. 3 in North Amer­ica in e-com­merce, as well as in mo­bilecom­merce in the U.S., and be­hind only Ama­zon and Wal-Mart in dol­lar value of trans­ac­tions.

The com­pany said the deal will mean be­tween $75 mil­lion and $110 mil­lion in cost sav­ings over the next three to five years. That’s in line with an analysis from Citi, which has sug­gested cost sav­ings of up to $100 mil­lion a year. In the near term, though, it ex­pects the cost sav­ings to be small.

Lib­erty, based in En­gle­wood, Colo., will is­sue 53.4 mil­lion shares of QVC Se­ries A com­mon stock to Home Shop­ping Net­work share­hold­ers. It said Thurs­day that’s the equiv­a­lent of pay­ing $40.36 per share for HSN Inc. of St. Peters­burg, Fla.

The deal is ex­pected to close in the fourth quar­ter.

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