ShopNBC's Circular Firing Squad

You better duck! The mud and lawsuits are flying at ShopNBC and it ain’t pretty, y’all.

Just to catch you up on all the dirt that’s been going on: ShopNBC can’t ever manage to make a profit, so there has been lots of executive musical chairs, hirings, firings, and circular finger pointing.

Last year, the Chairman of the Board, John Buck—remember that name, he comes into play quite a bit in this little soap opera--canned the current CEO, William Lansing, after he couldn’t manage to pull ShopNBC out of the red after 3 ½ years on the job. Buck replaced him with Rene Aiu amongst great fanfare. But, unfortunately, the honeymoon didn’t last. After only six months, Back canned Aiu too.

But Aui is fighting back in a lawsuit that alleges all kinds of juicy and interesting tidbits.




Aiu claims that when she was hired, Buck and his Board of Merry Men approved her long-term turnaround plan and allowed her to hire several veterans of the home shopping industry.

However, Buck did not approve of Aiu’s plan to cut pay for the top executives as a sign of unity with the company’s poor shareholders. He may run the company into the ground, fire all the workers, cut pay and benefits for everyone else, but he draws the line at cutting his own compensation. He’s a man of principles, people. It’s all about the principles.

The suit also alleges Buck is basically a bully who “intimidated employees who disagreed with him and pressured vendors for discounts, creating a culture of distrust and ill will.”

Also, Aiu and her new management team discovered—as I have wrote about many, many times—business among repeat customers was disappearing. But Buck and the Board of Merry Men had absolutely no idea this was happening, which begs the question—are they clueless or stupid? Honestly, how could they not know this?

Bucks answer to the problem? Fire the new management team.

This thinking is equivalent to changing doctors because you didn’t like your cancer diagnosis. Everything will be fine if you can just find a doctor that will tell you that you don’t have cancer.

A few days later, Buck sacked Aiu and other senior managers. And just to put the cherry on top of the sundae, he crowned himself CEO.

I’m liking this Rene lady more and more every day. She’s scrappy and she seems to know what the hell is going on.

ShopNBC Sinks as Wall Street Wavers

Home Shopping Channels aren't immune to the collapse of Wall Street ... sorry, small adjustment on Wall Street (whatever!)

ShopNBC has been in the toilet for years, but after a string of stupid decisions, they have finally decided to sell the company. The problem? Who would want to buy the struggling shopping channel???

Do you think QVC or HSN should buy in this kind of economic time? Of course, QVC owns quite a bit of HSN already, so that would be quite the home shopping monopoly--like getting all the railroads in Monopoly!

According to TradingMarkets.com, ValueVision Media Inc., the long-troubled operator of the ShopNBC cable TV channel and website, said Thursday that it is considering selling the company.

The move comes less than a month after the Eden Prairie company felt the wrath of shareholders because of the firing of its CEO and depressed quarterly earnings. ValueVision has struggled with slow sales and a high rate of product returns, and its ShopNBC cable channel ranks third, far behind competitors QVC and HSN.

CEO John Buck said Thursday that ValueVision would not necessarily be sold, and that other possibilities included a partnership, acquisition or private equity investment.

But others said an outcome other than a sale was unlikely.

"I think the takeaway here is that the company is exploring a sale," said Bob Evans, an analyst at Craig-Hallum Capital Group in Minneapolis. "I'm not surprised. I had thought it might happen earlier."

The 1,100-employee company has 800 workers in Eden Prairie, where it has five TV studios, website operations and a warehouse fulfillment center in addition to its corporate offices.

Investors' anxieties were raised last month -- with some calling for the company to be sold -- when it switched CEOs for the second time this year, ousting Rene Aiu after just five months on the job.

At the same time, ValueVision reported that second-quarter sales had fallen by 25 percent and that losses had tripled from a year ago.

Buck said the company, which hasn't posted an annual profit since 2001, was pressured by its public stockholders to consider its options. Public shareholders own 70 percent of the company; the other 30 percent is owned by General Electric and NBC Universal.

"They have a right to be upset, and we were sensitive to it," Buck said. "But I don't think we waited too long to look around at our options."

The move to hire an investment banker had been debated by the board over the past few months "given the current market value of the company and the need to find a way to significantly increase it," he said.

At Thursday's closing price of $2.38 per share, up a little more than 6 percent, the company's market capitalization was just less than $80 million. The stock rose 2 cents more in after-hours trading.

ShopNBC might be attractive to another company, because its assets exceed its market value, Buck said.

"Our balance sheet is debt-free, we've got $75 million to $80 million in cash, we've got a Boston TV station that's worth $34 million and we've got our Eden Prairie headquarters and distribution center," he said.

The most frequently mentioned potential deals involve QVC and HSN, as well as some private investment companies. But Buck said the company had not been approached by any of them.

Asked whether a competitor might want to buy ShopNBC to shut it down -- thus eliminating a player from the shopping-channel market -- Buck said, "I don't think that is a realistic possibility."

One of ShopNBC's problems is its position at the high end of the market. Its merchandise, primarily jewelry, attracts a smaller group of potential customers than rivals QVC and HSN. ShopNBC's average selling price is in the $200 range (the firm says it sells "little luxuries and fashion must-haves"), while its rivals have average selling prices in the $40 to $60 range.

That positioning proved to be a problem when the national economy declined.

"Higher-end retailers are hit harder," Buck said.

ShopNBC also pays a higher percentage of its revenue in fees to cable and satellite TV companies. ShopNBC pays about 18 percent of revenue to its cable and satellite partners for distribution of its channel, compared with about 5 percent for QVC and about 9 percent for HSN, Buck said. But he said ShopNBC's decision to offer higher-cost merchandise was not dictated by its higher distribution costs.

QVC and HSN both have greater reach with their cable and satellite TV channels, which are available in about 90 million homes compared with 70 million for ShopNBC, Buck said.

ValueVision said a committee of outside directors would review the firm's strategic alternatives; committee members will include George Vandeman, who will serve as chairman, Robert Korkowski and a third outside director to be named to the board. Piper Jaffray has been hired as a financial adviser.

Buck said he expected that ShopNBC will know within 90 days "what's out there in the market, what the interest level is." Even though ShopNBC is in the midst of renegotiating about 65 percent of its cable and satellite TV distribution deals, with a deadline of Dec. 31, that will not affect the review of its future, he said.

ShopNBC Board Member Resigns in Protest!

More high drama going down behind the scenes at ShopNBC. I just love it when inept, overpaid executives start slinging mud around.

If you don't already know what's going on, read my blog entries about it here and here.

According to StarTribune.com, Marshall Geller, a 16-year member of the board at ValueVision Media Inc. [parent company to ShopNBC] has resigned to protest the choice of the new leadership.

After huge second quarter losses were reported last week, CEO Rene Aiu was fired and replaced with board chair, John Buck.

Buck neglected to tell shareholders that the board of directors wasn't united in backing him as the new CEO or the direction of the company.

Geller said he did not know why the company chose to wait to disclose his resignation. In his letter, Geller said he was stepping aside to "honor my business judgment and maintain my reputation as a board member serving the public shareholders of the companies I am involved in."

Geller said he quit because he wanted to see "something more dramatic. ... There should have been a lot more emphasis on either doing some strategic partnership, selling the company, merging with someone, acquiring another company -- something other than continually changing management."

I don't claim to know these people or the inner workings of ShopNBC, but this Buck guy seems shady to me. He fires Aiu after giving her only five month to turn the company around (mind you, ShopNBC hasn't been in the black in many, many years), appoints himself in her place, and neglects to tell shareholders that the board doesn't actually agree with his decisions. What a snake.

ShopNBC Shareholders Revolt!

Are the ShopNBC shareholders turning into an angry mob?

According to TwinCities.com, angry shareholders want to put ShopNBC up for sale.


After another quarter of plummeting revenue (as reported by Queen Bea here), these "shareholders want the board of directors to hire an investment bank to sell ValueVision Media. They also question the competency of the board for firing Aiu (recently ousted CEO), wondering if Aiu, who was hired March 3, had enough time to turn around the company after it has spent years struggling to find its feet."


Basically, ShopNBC hasn't turned a profit since 2001, but the most recent CEO is taking the fall for the dismal second quarter financials. I hate to defend an overpaid CEO, but that's not exactly fair. Besides, if you're going to spend $600,000 on a CEO, then at least give her a chance to do something before you can her.

And, by the way, it doesn't take some high-falutin, over-paid executive to figure out what their main problem is. Customers have so many options today--online, brick and mortar, catalogue, home shopping television--that you have to separate yourself. If you want to get and keep new customers, you have to make your home shopping channel one that they will want to watch on a regular basis--endearing host personalities, great brands and vendors, lower price points, and a soft sell.

I wonder if you can buy ShopNBC on Value Pay???

ShopNBC Bucks CEO

According to StarTribune.com, ShopNBC has had a major shake up at the top.

After only five months on the job, CEO Rene Aiu was given the boot.

Why?

ShopNBC hasn't turned a profit since 2001 and things have gone from not-so-good to dismal. Second quarter revenue has plummeted 26 percent and their losses have tripled from a year ago.

Board Chairman John Buck, who hired Aiu in March after serving as interim chief, will become ShopNBC's new CEO. They also stole some veteran talent from QVC by hiring Keith Stewart as president and chief operating officer.

Here's what Buck had to say about the problem: "We need to go in and do almost a forensic -- though that's a harsh term -- of our customer service experience. We need to understand why the customer isn't buying from us today, and why they haven't bought from us in the last couple of months. The No. 1 priority is a sense of urgency around sales."

So what do you think is their problem???

I think that most of their products are waaaaaaaaaay to expensive and the majority of their hosts are completely unwatchable (So, no, Mr. Buck, creating even more urgency would be about the worst thing you could do). They also are seriously lacking in the brand and personality department. It's hard to list off ShopNBC vendors and hosts. They have no identity. What is there to get excited about?

Other bad news: ShopNBC has cut 22 percent of their staff in the last 15 months. Stock that sold for $57 in 1999 is valued below $3 today. Shares dropped 17 percent Friday to $2.26 based on the most recent financial information. The average price of an item on ShopNBC is about $225, compared with QVC's $40 average.