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Shopping Channels Prepare for HD Close-Up

May 22, 2008  •  Post A Comment

Media titans John Malone and Barry Diller may have settled their legal differences last week, but their home-shopping channels are preparing to do battle in the high-definition ring in an attempt to appeal to more affluent customers.
Both QVC, a unit of Malone’s Liberty Media, and HSN, formerly known as the Home Shopping Network and a division of Barry Diller’s IAC/InterActiveCorp, are in talks with the largest cable and satellite operators about distributing high-definition simulcasts of the channels.
QVC said this week that it struck an agreement with satellite leader SES Americom that enables the channel to begin simulcasts in high definition through a couple of smaller cable operators. The network plans to reach HD agreements with the larger multichannel distributors before the end of the year, according to Al Ulozas, senior VP of affiliate sales and marketing at QVC.
HSN also plans to launch an HD simulcast by next year after spending “multimillions” to upgrade its seven studios, according to Andy Sheldon, senior VP of television for HSN.
“Once you’ve heard a CD, the likelihood of going back to vinyl is pretty slim,” Mr. Sheldon said.
“The same thing will happen from analog to digital to HD.”
The networks, which are each available to more than 90 million U.S. households, are hoping to revive flattening earnings. While QVC’s first-quarter cash flow of $387 million was about 15 times that of HSN, its earnings rose just 3% on a revenue increase of 5%.
Meanwhile, IAC’s retailing unit, which includes HSN, had a 1% drop in first-quarter cash flow while the division’s sales rose 5%. IAC’s proposed spinoff of HSN, among other units, triggered a lawsuit from IAC shareholder Mr. Malone that was dropped last week.
With earnings in mind, the companies will try to use HD broadcasts to sell higher-end, higher-margin products to wealthier viewers.
“It may allow us to appeal to a slightly different audience and expand exposure to a different base of people,” Mr. Ulozas said. “We’re hoping a clearer picture may make it easier for people to make decisions about certain products.”

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