Two cable channels that are household names will merge in a deal put together by veteran cable entrepreneur John Malone. Variety reports that QVC and Home Shopping Network, the two best-known home-shopping operations in television, will merge in a $2.1 billion deal under Malone’s Liberty Interactive.
“Under the terms of the deal, Liberty Interactive, which owns QVC and already controls a 38% stake in HSN, will combine the two outlets,” Variety reports. “Shareholders in HSN will receive 1.65 shares of QVC’s Series A stock for each share of HSN. The companies said the offer values each share of HSN at $40.36, or a 29% premium, based on Wednesday’s closing stock prices.”
The deal is due to close in the fourth quarter, with Liberty Interactive indicating it plans to spin off its cable TV operations into an independent company to be called QVC Group. “That unit will include Zulily, a flash-sale site QVC purchased in 2015 for $2.4 billion, as well as the Cornerstone unit of HSN, which includes brands such as Ballard Designs, Frontgate and Grandin Road,” Variety reports.
The New York Times notes that the deal comes 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 start-ups like Jet and the clothing brand Bonobos,” The Times reports. “With e-commerce ascendant, nearly everyone else in the 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, from American Apparel to Radio Shack, have filed for bankruptcy protection.”
The Times notes that home-shopping networks are feeling the pinch from the increased competition.
“With their familiar pitches for impulse purchases of electronics, jewelry, makeup and fitness equipment, both QVC and HSN are grappling with ways forward,” The Times adds. “HSN’s sales declined 3 percent last year, while QVC’s have slowed. In April, Mindy Grossman, HSN’s chief executive since 2008, left to run Weight Watchers International.”
QVC President and CEO Mike George is expected to stay on to run the expanded QVC unit. In a statement, George said: “By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third largest mobile and eCommerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”