Mary-Anne is Just Plain Dumb

ContrarianProfits.com advises buying HSN stock at or under $12 because of a fictional lady named Mary-Anne. Here's what they had to say about Miss Mary-Anne:

Her name is Mary-Ann and she is an addict.

Her addiction? The Home Shopping Network (HSNi) owned and operated by HSN, Inc.

Mary-Ann (actually NOT her real name) tells me that she can’t help it… the convincing chatter by charming hosts, the phoned-in testimonials, the seemingly reasonable prices, the “limited number available” push, and the countdown clock – it just wins her over every time.

Is it just me or does this sound condescending? Basically the writer is advising investors to buy this stock not because HSN has improved (which it has), but because its customer base is just plain dumb.

Maybe--just maybe--HSN was forced to get better products, brands, spokespeople, and advertising campaigns because their customers demanded it. And--just maybe--HSN's new direction and responsiveness to their customers would be a better reason to recommend the stock.

Just a thought.

But I've purchased from HSN, so what do I know?

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 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.

Keeping It All in the Family

There have been lots of Internet buzz about IAC, which owns HSN, separating into five different companies. I have avoided all these aritles because--quite honestly--the stock market makes my eyes glaze over (which is probably why I'm not rich ... oh well).

So why do I care about any of this?

Turns out that one of the biggest investors in IAC is Liberty Media. Guess what Liberty Media owns??? That's right, QVC!

Here's what this article had to say about the IAC split:

That leaves HSN. I don't know if regulators would let Liberty Media's (NYSE: LBTYA) QVC hook up with HSN, but there's a reason why Liberty has been a longtime investor in IAC, and it has nothing to do with scoring Madonna tickets through Ticketmaster or angling for a red week of Interval timeshare travel in Maui.

So what sort of Dr. Evil world domination is QVC up to exactly?!?!?! And is HSN their new Mini Me?