Archive for the ‘General Electric’ Category

Financially Ailing ShopNBC Looking To Raise Up To $75 Million In Stock Offering

July 26, 2010

Financially strapped ShopNBC is looking to potentially raise $75 million through a stock sale.

ValueVision Media, parent of the No. 3 home shopping network, filed a so-called “shelf registration,” or S-3 form, Monday with the Securities and Exchange Commission for the stock offering. ShopNBC declined to comment.

But in its filing the company said that if it doesn’t stem its losses, “We could reduce our operating cash resources to the point where we will not have sufficient liquidity to meet the ongoing cash commitments and obligations to continue operating.”

Through a shelf registration, a company can fulfill certain SEC-mandated registration-related procedures before offering shares to the public, which permits the company to go to market more quickly when they are ready to do the public offering. The company essentially puts stock shares “on a shelf” in case it needs to raise capital for any reason.
We have a history of losses and a high fixed cost operating base and may not be able to achieve or maintain profitable operations in the future.

In its filing, ShopNBC said it had operating losses of about $41.2 million, $88.5 million and $23.1 million in the years ended January 30, 2010 (“fiscal 2009”), January 31, 2009 (“fiscal 2008”) and February 2, 2008 (“fiscal 2007”), respectively.

It also reported a net loss of $42 in fiscal 2009 and a net loss in fiscal 2008 of $97.8 million.

“While we reported net income of $22.5 million in fiscal 2007, this was due to the $40.2 million pre-tax gain we recorded on the sale of our equity interest in Ralph Lauren Media, LLC, operator of the polo.com website,” the S-3 filing said. “There is no assurance that we will be able to achieve or maintain profitable operations in future fiscal years.”

ShopNBC said it has high fixed costs, primarily driven by fixed fees on the merchandise it sells to cable and satellite operators in exchange for distribution.

“In order to operate on a profitable basis, we must reach and maintain sufficient annual sales revenues to cover our high fixed cost base and/or negotiate a reduction in this cost structure,” the filing said. “If our sales levels are not sufficient to cover our operating expenses, our ability to reduce operating expenses in the near term will be limited by the fixed cost base. In that case, our earnings, cash balance and growth prospects could be materially and adversely affected.”

ShopNBC reported that it has limited unrestricted cash to fund its operations, $20.9 million as of May 1, 2010 (with an additional $4.9 million of cash that is restricted and used to secure letters of credit and similar arrangements).

“We expect to use our cash to fund any further operating losses, to finance our working capital requirements and to make necessary capital expenditures in order to operate our business,” the filing said. “We also have significant future commitments for our cash, primarily payments for our cable and satellite program distribution obligations and redemption of our Series B Preferred Stock. If our vendors or service providers were to demand a shift from our current payment terms to upfront prepayments or require cash reserves, this will have a significant adverse impact.”

It appears that ShopNBC’s shareholder GE Capital Equity will have to approve the offering, according to an 8-K that the network filed with the SEC in June.

“On June 10, 2010, our board of directors authorized the filing of a shelf registration statement on Form S-3 with the Securities and Exchange Commission covering the sale by our company of up to $75,000,000 of securities, including common stock, preferred stock, warrants, units and stock purchase contracts,” the company said in that filing. “Our shareholders agreement with GE Capital Equity Investments, Inc. (“GE Equity”) and NBC Universal, Inc. require the consent of GE Equity in order for our company to issue new equity securities and to incur indebtedness above certain thresholds, and there can be no assurance that we would receive such consent if we made a request.”

ShopNBC’s largest shareholder, NBC Universal, back on June 24 decided not to sell its 6,452,194 shares in the home shopping network “due to prevailing prices.”

NBC Universal Chief Jeff Zucker, His PR Folks And His Talent Host Holiday Party For Media At 30 Rock

December 9, 2009

We just got back to Jersey after attending NBC Universal’s party for the press. The soiree Tuesday night, held on the 52nd floor of 30 Rock in Manhattan, was officially off-the-record. But we can certainly tell you who we saw there.

As we were checking our coat, Kathie Lee Gifford was putting on her’s and leaving. Her NBC morning-TV partner, Hoda Kotb, was still inside at the shindig.

The event, sponsored by NBCU chief Jeff Zucker and his communications team, came on the heels of news that the nation’s largest cable operator, Comcast, was buying the home of the Peacock Network along with its stable of cable channels, which includes USA Network, SyFy, Bravo, Oxygen, CNBC and MSNBC. The seller is General Electric.

A shirt-sleeved Zucker briefly addressed the gathered media, and made some funny jokes about the coming merger (we can’t say what, it was off the record, remember?)

There were both NBCU talent and suits at the holiday party. NBC News anchor Brian Williams, a Jersey guy, stopped by, as did Lester Holt, Ann Curry and Amy Robach from “The Today Show.” Jimmy Fallon popped by when the party was ending.

As for execs, in addition to Zucker there was NBC Cable Entertainment chief Bonnie Hammer, Bravo honcho Frances Berwick, NBCU’s women’s and lifestyle chieftain Lauren Zalaznick, CNBC president Mark Hoffman and “Saturday Night Live” creator and producer Lorne Michaels.

We have written about Bravo’s “The Real Housewives of New Jersey” for NewJerseyNewsroom.com, and NBC has big home shopping connections and affiliations.

First of all, GE/NBC currently owns about 32.5 percent of ShopNBC on a fully diluted basis of 37.6 million shares. NBC’s 6.4 million shares represent 16.8 percent ownership and GE’s 6 million common stock purchase warrants represent 15.7 percent.

Secondly, the stars of several of NBCU’s cable show have home shopping lines, including: Tori Spelling, who is in Oxygen’s “Tori & Dean: Home Sweet Hollywood,” on HSN; Rachel Zoe, from Bravo’s “The Rachel Zoe Report,” on QVC; Isaac Mizrahi, who hosts Bravo’s “The Fashion Show,” on QVC; Padma Lakshmi, from Bravo’s “Top Chef,” on HSN; and Ramona Singer from Bravo's "The Real Housewives of New York City." on HSN.

The party gift was a DVD of the third season of NBC’s “30 Rock,” appropriately.

ShopNBC May Partner With Bravo, Whose Reality TV Stars Like Rachel Zoe And Isaac Mizrahi Already Have Deals With QVC And HSN

November 18, 2009

ShopNBC apparently has something cooking with the cable network Bravo, but we couldn’t find out many details Wednesday.

During a third-quarter conference call ShopNBC CEO Keith Stewart said that the network is looking to partner with Bravo to sell some of Bravo’s “content” also have a presence on the channel.

“I can’t speak for NBC, but I do talk to them quite frequently, and we are in active conversations to work with some of their properties, like Bravo,” Stewart said. “To the extent that we can sell some of the Bravo content and also be on some of their channels, that will be a cost-effective way to do it.”

Bravo is a unit of NBC Universal, which is expected to be purchased by cable giant Comcast. NBC has a minority stake in ShopNBC.

A raft of the stars of Bravo’s many reality TV stars have lines on home shopping networks. Celebrity stylist Rachel Zoe of “The Rachel Zoe Project” sells clothes and accessories on QVC, and Heidi Klum of Bravo’s former hit, now Lifetime’s “Project Runway,” had a jewelry line on QVC until a suit agains her by Van Cleef & Arpel put the kibosh on that.

Fashion designer Isaac Mizrahi, of Bravo’s “The Fashion Show,” is doing a line of apparel, accessories and home goods that will debut next month on QVC.

On HSN, Ramona Singer of Bravo’s “The Real Housewives of New York City” has a fine jewelry line, while Padman Lakshmi of Bravo’s “Top Chef” is hawking teas and herbs.

On the conference call, Stewart only made one more comment about the potential Bravo arrangement, and ShopNBC wasn’t “adding any color,” as Wall Street analysts say, after the call.

“Now all that said, NBC is a stand-alone unit and they need to make money,” Stewart said. “And we unquestionably need to make money. So to the extent it compromises our margins to you, it would not be a good business decision. But to the extent it does work for both of us, we’ll launch some of the content that NBC will offer.”

General Electric and NBC currently own about 32.5 percent of ShopNBC on a fully diluted basis of 37.6 million shares. NBC’s 6.4 million shares represent 16.8 percent ownership and GE’s 6 million common stock purchase warrants represent 15.7 percent.

Post Comcast-NBCU Deal, ShopNBC Says To Ask General Electric What It Plans To Do With Its Stake In The Network

November 18, 2009

Keith Stewart

ShopNBC officials don’t know how Comcast’s expected purchase of NBC Universal will affect the network, where NBCU and its parent General Electric hold a 32.5 percent stake.

“You have to call GE and ask them,” ShopNBC CEO Keith Stewart said Wednesday. “It’s difficult to speculate what GE is going to do.”

During a third-quarter conference call, ShopNBC was asked twice about the expected Comcast-NBCU deal and its potential impact on the network, and Stewart danced around it.

GE/NBC currently owns about 32.5 percent of ShopNBC on a fully diluted basis of 37.6 million shares. NBC’s 6.4 million shares represent 16.8 percent ownership and GE’s 6 million common stock purchase warrants represent 15.7 percent.

First, one investor said he was concerned that if GE was looking to get out of the media business, why would it keep its stake in ShopNBC.

“As for changing the landscape, I really don’t see much of a change in the landscape,” Stewart said. “They are a minority holder, albeit around 30 percent.”

That same caller expressed concern that ShopNBC would lose leverage in negotiating carriage deals if it no longer had NBCU
as a shareholder.

“I really couldn’t possibly say that impacts us negatively or positively,” Stewart said. “We have a very good relationship with Comcast as it is, and what we pay them for distribution, last time I checked they still need a revenue stream.”

A second investor later noted that GE and NBCU have three seats on ShopNBC’s board, and what would be GE’s incentive to keep its stock.

“I don’t know really how to answer that question,” Stewart said, adding that he looks at GE and NBCU as passive investors.

Chief financial officer Frank Elsenbast chimed in, “In the event there was an NBC transaction with Comcast, we still would have a very significant investor in GE owning 13 percent of the company.”