ShopNBC, looking to float a $75 million stock offering, sure sounds wary about its newest large shareholder Comcast.
In a filing with the Securities and Exchange Commission Wednesday, ValueVision Media i.e. ShopNBC said that Comcast could block some of its future plans and could opt not to renew a license deal that lets the home shopping network use “NBC” in its name.
Comcast inherited a 17 percent stake in ShopNBC when it acquired NBC Universal.
We have to run to our day job, but here are some of the comments in the S-3 filing:
NBCU, of which a controlling interest is now owned by Comcast, and GE Equity have the ability to exert significant influence over us and have the right to disapprove of certain actions by us.
As a result of their equity ownership in our company, NBCU, of which a controlling interest is now owned by Comcast, and GE Equity together are currently our largest shareholder and have the ability to exert significant influence over actions requiring shareholder approval, including the election of directors, adoption of equity-based compensation plans and approval of mergers or other significant corporate events.
Through the provisions in the shareholder agreement and certificate of designation for the preferred stock, NBCU and GE Equity also have the right to block us from taking certain actions. On June 9, 2010 we registered for sale all of the outstanding shares of common stock owned by NBCU, however, on June 24, 2010, NBCU decided not to sell the shares registered in that registration statement due to prevailing prices.
This registration statement has not been withdrawn and NBCU may decide to sell its shares pursuant to that registration statement in the future. The interests of NBCU and GE Equity may differ from the interests of our other shareholders, and they may block us from taking actions that might otherwise be in the interests of our other shareholders.
Our directors, executive officers and principal shareholders will continue to have substantial control over us and could delay or prevent a change in corporate control.
Our directors, executive officers and holders of more than 5 percent of our common stock, together with their affiliates, beneficially own, in the aggregate, over 38 percent of our outstanding common stock. As a result, these shareholders, acting together, would have the ability to control the outcome of matters submitted to our shareholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.
In addition, these shareholders, acting together, would have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:
• delaying, deferring or preventing a change in corporate control;
• impeding a merger, consolidation, takeover or other business combination involving us; or
• discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
As to the NBC name, the SEC filing says:
Expiration of the NBCU branding license would require us to pursue a new branding strategy that may not be successful.
We have branded our television home shopping network and internet site as ShopNBC and ShopNBC.com, respectively, under an exclusive, worldwide licensing agreement with NBCU for the use of NBC trademarks, service marks and domain names that continues until May 2012 or May 2013 if a one-year extension is agreed to by both NBCU and us.
We do not have the right to automatic renewal at the end of the license term, and consequently may choose or be required to pursue a new branding strategy in the next 10 months which may not be as successful as the NBC brand with current or potential customers. NBCU also has the right to terminate the license prior to the end of the license term in certain circumstances, including without limitation in the event of a breach by us of the terms of the license agreement or upon certain changes of control.