Archive for the ‘ValueVision Media’ Category

ShopNBC Seems Apprehensive About Comcast, Its New Big Stockholder

February 23, 2011

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This registration statement has not been withdrawn and NBCU may decide to sell its shares pursuant to that registration statement in the future.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.

Advertisements

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.”

Will NBCU’s Plans To Keep Its ShopNBC Stake Derail Any Sale Of The Home Shopping Network?

June 24, 2010

What's Keith Stewart got cooking at ShopNBC?

ShopNBC was put up for sale in 2008, and then was taken off the block a few months later. Well, we heard it’s for sale again.

ShopNBC declined to comment, by the way.

There’s been a lot of talk about possible home-shopping-network sales this week, so we’ll add this to the mix.

The ShopNBC-sale scenario we had heard about would potentially have been made easier because of NBC Universal’s plans, announced in May, to sell its 20 percent stake in the home shopping network. But on Thursday NBCU threw a monkey wrench into that possibility. Citing ShopNBC’s low stock price, NBCU announced that it wasn’t going to unload its share in the network.

Wall Street Journal blogger James Altucher was bullish on ValueVision Media, ShopNBC’s corporate parent, in a blog earlier this week. The home shopping network has 75 million subscribers, and Altucher values it at $270 million to $300 million in his blog.

He bases that price on payment of $3.92 per subscriber, which he says is “the cheapest price paid for any network on a subscriber by subscriber basis” in the past.

Altchuler, who says that Barry Diller unsucessfully bid on ShopNBC twice, has the inside dope on the initial attempt to sell ShopNBC. ValueVision shopped the network to more than 100 companies. It wound up with four serious suitors, two of them strategic buyers and two financial sponsors, according to Altuchuler. But a deal was never struck

“I think the clearing of the NBC Universal stake finally bring buyers into the loop here,” Altchuler wrote.

Well, that’s off the table now.

There’s been a lot of buzz on Wall Street about home shopping networks this week, following news that Liberyr Media Corp. was spinning off two companies to leave Liberty Interactive, which QVC is part of, as essentially a standalone company. That fueled speculation that this move by cable legend-cowboy-God John Malone was a prelude to merging QVC and HSN.

We’ll see about that one.

ShopNBC chief Keith Stewart has said that with NBCU selling its take in the home shopping network, ShopNBC will rebrand itself next year. The network has been working for months on coming up with a new name, according to Stewart.

Would you go through that trouble if you were selling your network? Or is it an attempt to dress up the property to attract suitors?

We haven't seen too much of Suzanne Somers on ShopNBC

Meanwhile, people familiar with the situation say that ShopNBC’s infrastructure, like its call centers, are not big enough to support the network.

As one sign of the times, ShopNBC is ordering a just a fraction of the amount of merchandise a month from vendor Suzanne Somers that HSN used to order, according to sources. In fact, although Somers initially said she would be on ShopNBC once a month, her visits have been much less frequent.

And we’re told some apparel vendors have to carry orders, meaning if their merchandise doesn’t sell ShopNBC can return it to them.

We wonder if they can only return it within 30 days?

Former ShopNBC CEO Rene Aiu Scores $1.5 Settlement Of Breach-Of-Contract Suit Against The Network, Parent ValueVision

December 8, 2009

Former ShopNBC CEO Rene Aiu Has Reason To Be Smiling

We spent seven years covering courts in Jersey, and we just love writing about lawsuits. We’re getting our chance to do that today, because former ShopNBC president and CEO Rene Aiu has settled her litigation against the home shopping network for a tidy $1.5 million. Sweet.

ShopNBC’s parent company, ValueVision Media, filed a 10-Q with the Securities and Exchange Commission Monday disclosing the Dec. 1 settlement of the breach-of-contract lawsuit that Aiu filed back in Nov. 21 last year. ShopNBC will record a charge of $1,505,000 in the third quarter to pay the settlement.

According to the filing, Aiu will get gross cash payments of $875,000 for severance-pay claims; $250,000 relating to the sale of her residence; and $360,000 in attorneys’ fees. That adds up to $1,485,00 to us, not $1,505,000, but we can’t explain the small discrepancy. Maybe we did the math wrong.

Whatever. It looks like Aiu, who was hired by ShopNBC March 3, 2008, made out quite nicely. She was a veteran of HSN and something called Jupiter Shop Channel Japan when she came to ShopNBC, assigned to try to turnaround the troubled channel. That March and April, she recruited three other senior executives to create her management team. Cost for those four execs in fiscal 2008: $1.1 million.

But ShopNBC didn’t give Aiu much time to do her thing. Six months after she was hired, on Aug. 22, ShopNBC management “terminated” her and the other three new company officials. The board named chairman John Buck CEO, and hired QVC veteran Keith Stewart as president and chief operating officer.

ShopNBC CEO Keith Stewart

We were working at Multichannel News and covered ShopNBC’s second-quarter conference call in August 2008, when investors ripped Buck a new one (we couldn’t write that at Multi) for firing Aiu so quickly, without giving her a chance to do her thing. In all our years of reporting, we have never heard a more hostile and bitter conference call between investors and a company.

About four months later, Aiu sued ValueVision, i.e. ShopNBC. According to the Minneapolis Star Tribune, Aiu alleged in the suit that Buck had given the OK to her turnaround plan, and to her hiring the three new execs. But Aiu charged that Buck was not a very happy camper when she suggested that compensation to ShopNBC officers and its directors be cut, “as a a sign of solidarity with long-suffering shareholders,” according to the Star Tribune.

The paper also reported that Aiu claimed that she and her new team learned that ShopNBC’s business among its best repeat customers had been eroding for years, and that the board was unaware of this looming problem.

The lawsuit alleged that when Aiu presented her findings and suggestions to Buck, her told her to can the new management team. A couple of days later, Aiu and the three senior execs she brought in were “terminated,” as they tend to say in lawsuits.

The Star Tribune said that Aiu’s suit alleged that Buck intimidated employees who disagreed with His Highness. The litigation also alleged that Buck hit vendors up for discounts.

In a nutshell, Aiu charged that she was shitcanned without good cause and that she was — how shall we say it — stiffed out of $2.1 million in severance pay, the Star Tribune reported.

Stewart was promoted to the CEO position on Jan. 27 — the day after Multichannel News pinkslipped us — and Buck went back to his old sole title of chairman.

Stewart brought in a group of fellowQVC alum, and they are actually doing a great job of mounting a turnaround at ShopNBC. The network is not out of the woods by a long shot, but Stewart has managed to diminish the flow of red ink from a river to a trickle.