Posts Tagged ‘dissident shareholders’

ShopHQ Seeks Shareholder Support With New Missive

June 4, 2014

ShopHQ has fired back at its dissident shareholders with a new missive to all its shareholders, asking them to keep the current management in place.

The filing was made Tuesday with the Securities and Exchange Commission.

It is late. We are tired. You can check it out.

Should Keith Stewart Get A ‘Mulligan’ At ShopHQ?

June 3, 2014

ShopHQ (also known as ValueVision Media Inc.) and its dissident shareholder group Monday offered dueling stories about how the No. 3 home shopping network is performing.

First, we got a press release from the stockholders who are trying to oust ShopHQ honcho Keith Stewart at the company’s shareholder meeting later this month. Clinton Group President Gregory Taxin wrote this letter to all stockholders.

Here it is, and it’s a doozy.

To Our Fellow Shareholders of ValueVision:

Like you, we are investors in ValueVision Media Inc. (“ValueVision” or the “Company”). We have nominated six independent professionals for the ValueVision Media Board of Directors. Their biographies and their thoughts about the business and its strategy are described in detail on our website,, including in a 42-page presentation and five-minute video.

We are enthusiastic believers in ValueVision’s opportunities, and our commitment and belief in the Company’s bright future has only grown as we have performed additional due diligence.

That said, we would like to see the Company ambitiously exploit its ubiquitous cable and satellite distribution by offering proprietary products on air, with programming that is engaging and entertaining. We believe the Company can challenge HSN and QVC with a fresh approach to home shopping – an omni-channel approach – that borrows from the best of television, merchandising and live entertainment. At a minimum, we strongly believe that ValueVision can be a significantly improved version of itself; at best, it can rival HSN for market share and market cap.

In our view, we are unlikely, as shareholders, to see any of this at ValueVision if we collectively allow the current management team and Board of Directors to plod along, contently, as the also-ran, third-place player in this three-company market. Management enjoys a great lifestyle: at least ten senior members of management live 900 miles or more from the office, often jetting in on Monday and out on Thursday (mostly at Company expense), and the Board members pay themselves excessively (twice the average for a company this size), mostly in cash.

No wonder, then, the existing team would appear by their actions to prefer docile shareholders to the pressure of having to develop an ambitious plan, perform consistently, generate sustained profits and, perhaps worst of all, having to work five days every week from the Company’s offices.

We do not believe greatness will likely be borne at ValueVision from modest, incremental improvements, implemented slowly by a partially committed management team. But greatness is possible. We are aware of a multitude of vendors, brands, personalities and celebrities who would like to partner with our nominees at a revitalized ValueVision to create innovative, proprietary products that Americans would be excited to buy, and which they could only buy from ValueVision. We believe combining such exclusive product with inventive and captivating programming (including live events, audience participation opportunities, social media engagement and intriguing on-air personalities) is a formula for leadership in home shopping and eCommerce.

The incumbent management team and Board are opposed to the changes we are proposing and do not believe the Board of Directors needs any new directors. Yet, rather than rely on solid logic or valid analyses to back their instinctual desire to retain control, they have resorted to what we view as shameless factual distortions, contorted timelines and measurement periods and manipulations of data to convince shareholders that all is well. They are not to be believed.

Take, for example, the Company’s recent attempts to brush aside significant stock price underperformance through the creative use of arbitrary endpoints. The fact is that since Mr. Stewart became the Chief Executive Officer, ValueVision stock has significantly underperformed HSN and Liberty Interactive (which owns QVC). The same result holds if one measures from the day Mr. Stewart became the Chief Operating Officer of the Company in August 2008.

The incumbent team would instead have you focus on just the last one year, nine months and eight days, as if the first 1296 days of Mr. Stewart’s CEO tenure were just a probationary period. It is true if one cleverly moves the bookends around a bit – starting the stock price measurement period just after the stock collapsed 75% – the most recent 496 days look pretty good. Of course, the stock has not recovered to its mid-2011 level and trades today at a price roughly half of where it traded twenty years ago (at the end of 1993), but the incumbent team hopes you will just focus instead on the last 21 months and eight days, a period in which the stock price has increased.

There is no escaping management’s actual track record, however. In March 2011 – during a period of Mr. Stewart’s tenure that, with hindsight, is now termed the “strategic alignment” era (apparently to be disregarded by shareholders entirely, as if it never happened) – Mr. Stewart told shareholders on a conference call that he was “very, very confident in our ability to drive shareholder value this year.” Unfortunately, however, Mr. Stewart forgot to tell shareholders that the Company was experiencing an era of “strategic alignment,” and that they should actually wait to buy the stock until the following August 15, 2012, the moment the incumbents now choose to use as their yardstick. And woe to the shareholder who took Mr. Stewart’s March 2011 confidence to heart: that investor lost 71% of their money by year-end 2011 and is still 30% in the hole, today.

There are, we believe, no mulligans in public company stewardship.

We do not believe management and the Board should be able to brush aside its long-running underperformance, ignoring vast periods of time by labeling them in slide decks as “strategic alignment” periods or “survival” eras, or frankly, anything else.

This convenient time-splicing pervades the incumbents’ materials in this proxy fight: The Company compares its present performance alternatively to 2008, 2009, the “trailing twelve months” ending July 2012, August 2012, 2008 and 2011, 2008 and each year through 2013, as well as various permutations of these periods. As noted in our May 28 presentation to shareholders, the Company has admitted in writing that it changed its method for calculating various metrics over these periods and has acknowledged that it has not provided complete, consistently calculated numbers to shareholders. We cannot then verify the numbers or trend lines presented or know whether a more complete picture would present a different impression.

On metrics we know for certain, the performance under the incumbent team has not been laudatory. Today, the Company generates less revenue per home in which its programming is available than in any year from 1999 to 2008. This is true even as both HSN and QVC have grown their per-home productivity significantly. The management team has missed its own projections for revenue, profit margins, operating cash flow, profit and product mix repeatedly and often by a wide, wide mark. In January 2010, for example, Mr. Stewart proclaimed that the Company would generate revenue of $1.1 billion by 2014. Instead, analysts do not believe the Company will produce even $700 million of revenue this year.

We believe we know why. The current business plan – focused as it is on selling widely available, “distinctive national brands” with a programming format that is reminiscent of the 1990s and a monotonous and repetitive schedule (last week Invicta watches were sold during half of all primetime programming hours) – is tired.

We are convinced that if a potential customer sat through any part of the five straight hours of Invicta watch selling that was on ValueVision’s air last Monday from 7 pm to midnight and decided she wanted to buy an Invicta watch, she almost surely would have gone to the Web to search for lower prices. When we performed a simple Google search for “Invicta watches”, Google showed us six retailers (Sears, The Watchery, Amazon,, Overstock and Zales) that sell Invicta watches, all of which appeared above “ShopHQ” in the search results. Other well known retailers such as JCPenny, Kohl’s and Macy’s also show up on the first Google search results page as selling Invicta watches. Sears and Amazon each sell more than 500 styles of Invicta watches on their websites.

How does ValueVision ensure that the marketing it is doing on behalf of Invicta (or any of the other “distinctive national brands” such as Gucci, Versace and Ferragamo) translates into a purchase from ValueVision? We do not believe it can. (It is also not clear that the “distinctive national brand” model is sustainable given what we know about these brands’ reluctance to allow ValueVision to promote freely their brands and products on social media and elsewhere.)

In short, without proprietary brands – like the ones developed successfully by HSN and QVC – ValueVision is using its precious airtime to evangelize brands and products that consumers can purchase elsewhere, often at lower prices. Our airtime is being used to help Sears, Amazon, Overstock, Macy’s, Kohl’s, JCPenny and Zales. Such a model is not a recipe for success, in our view.

Neither is selling “distinctive” goods with a fuzzy, standard definition picture or doing so in staid television studios with generic programming. HSN and QVC have moved beyond this – offering live concerts, “red carpet” events and major personalities and celebrities to draw audience.

It is no wonder to us, then, that the incumbent team and the current business model has failed to generate more revenue per home. ValueVision has been stubbornly stuck at $7 per year per home for the entire tenure of the current Chief Executive Officer, while HSN is at $24 per year per home and QVC is well north of $50. Slow improvements by a sojourning management team will not close this gap any time soon.

That is why we believe it is time for a new Board of Directors and a new, more ambitious business plan. The independent professionals we have nominated have deep industry experience, having served as top executives at HSN and QVC and in the retail, entertainment and television businesses. They have considered carefully the strategy of the Company and have put together a detailed plan for how to grow the Company’s business significantly and create shareholder value. That plan is available in the presentation on our campaign website, It involves creating proprietary brands that can be marketed exclusively on ValueVision’s ShopHQ with engaging and diverse programming that will captivate and entertain viewers. The idea is to marry the best of the entertainment, eCommerce and television worlds.

But the incumbent management team and directors are having none of this. They believe the current team and business plan will, given enough time, work out well for shareholders. Perhaps they believe there will be a wave of interest in Invicta watches timed perfectly with an Internet outage.

To convince shareholders to stick with the current plan and team, the incumbents have contorted, in our view, their own record and are now also misstating and manipulating the record of our nominees. Our nominees, as noted, bring substantial experience as Chief Executive Officers and other C-suite executives in the home shopping, retail, entertainment and television businesses. It is, in our view, a testament to the incumbents’ desperation that they claim, with seemingly straight faces, that a slate made up of such talented people is “weak” and does not have relevant “experience or expertise.”

Really? The former CEO of HSN has nothing to add to the market-share losing, third-place home shopping network? The former President and CFO of HSN, has nothing to add? The former head of marketing for QVC? The Emmy-award winning producer of some of television’s most successful shows? The former CEO of Sony Music Entertainment, who has relationships with leading and emerging celebrities and personalities? The former President and Chief Merchant of Saks?

The incumbents supposedly believe our independent nominees constitute a “weak slate” with nothing to add (and have no “relevant” experience), yet the incumbent directors find themselves worthy of reelection. Shocking. So, while our nominees have no “relevant” experience, the incumbents support instead the election of a former insurance company executive, an Internet ad sales executive, the CFO of a health care information technology company (which was recently delisted for failing to produce financial statements on time), and a former auditor and technology company CFO.

Ah, but the incumbents note that each sitting director has “media related public board experience.” But the only such experience they have is on the board of ValueVision Media itself. Similarly, the incumbents say they each have “multi-channel retail experience” because they each sit on the board of ValueVision Media. So, for example, the former CFO of a company that provided “workforce optimization software” is, ipse dixit, more qualified to serve on the ValueVision Board – and has more “relevant” experience – than the former CEO of HSN, the Company’s key competitor. By this same standard, anyone presently on the Board would be well qualified because, well, he would be on the Board. This is a complete tautology not worthy of serious consideration.

The incumbents also selectively criticize the public board experience of our nominees. Left out of their analysis (and highly misleading table of stock price returns), however, is the board experience of Tommy Motolla (sic The Clinton Group misspelled the name of its own board nominee, it is Mottola not Motolla) and Mark Bozek. This is not a coincidence. The stock price returns of the boards on which Mssrs. Motolla and Bozek have sat have outperformed the market significantly. Do the incumbents fairly present that data for shareholders to consider? No. Instead, faced with these inconvenient facts (i.e. facts that do not fit the incumbents’ preferred story line), the incumbents simply left those boards off their slide and out of the performance table.

It is nothing short of misleading for the Company to say the “nominees have exhibited dismal track records” while intentionally leaving out the companies that performed well. It is also misleading to show an “average” stock return that only averages the worst performers. (Also, ask yourself: Did the incumbents provide a table of stock returns for the other companies on which the incumbents serve as directors? They did not. I bet you can guess why. If you find stock returns of other companies to be relevant to your vote, I encourage you to look at the returns at Interpublic Group,, Jones Group and Patterson Companies during the board tenure of the incumbent Board nominees.)

The incumbents also take aim at Clinton Group. Such an attack is really beside the point: We are not proposing to put one of our people on the Board or to set the strategy for the Company. Instead, we have nominated six independent professionals to join this Board. They, not us, will help set strategy and oversee operations and they have provided a detailed description of their thoughts and plans. This election is about the alternatives for the Board and not about us.

That said, the incumbents use highly misleading charts and statistics to denigrate our firm’s track record and reputation. The fact is that in the last five years, our activist fund has made 17 investments in consumer-facing (retail and restaurant) companies. Since the date of our first investment into each of those companies through last Friday, the companies in which we invested returned twice the return of the Russell 2000. The same is true of the five companies (of those 17) in which we have nominated individuals for (or otherwise sought) board seats.

What, then, of the charts and words used by the incumbents in an attempt to make our track record appear poor? Take, for example, the treatment of our investment in Dillard’s. The incumbents display in their presentation the stock returns for Dillard’s until the end of 2008.

We all remember how that year ended (including at ValueVision, whose stock was down 94% that year). Many of the directors we supported for the Dillard’s board of directors in 2008, including one we specifically identified and recommended, remain on the Dillard’s board, contributing to shareholder value, to this day. Since the end of 2008, Dillard’s stock is up 24 times.

Funny how the incumbent ValueVision directors find a way to criticize our efforts at Dillard’s even though the stock has wildly outperformed ValueVision (and the market) over this period. We note that since our Schedule 13-D filing at Dillard’s on January 29, 2008, Dillard’s total return for shareholders has been +535% while ValueVision is down 26% over the same period.

We are disappointed that the incumbents – fiduciaries for the shareholders – appear willing to use arbitrary cut off dates (in analyzing their own track record and ours), shift comparison periods between analyses, intentionally omit data to skew averages and make seemingly self-serving determinations about who is able to contribute to the Board. We wish the incumbents would debate us on the facts and merits of our proposals instead.

We believe the Company can be better and we hope you think so too.

We are thrilled for the support of the employees and vendors who have called us and indicated they are sending in their GOLD ballots. The Company they describe from the inside is one with a dysfunctional management structure and a troubling lack of vision, but one with immense, latent potential. They want change. So do we.

Don’t be fooled by fallacious arguments and numerical manipulation. ValueVision today has an enterprise value equal to one-tenth of HSN and one-fiftieth of QVC. The stock is off 33% so far this year. We do not believe it has to stay this way. Our nominees have a detailed plan that is described fully in our presentation (on pages 27 to 32), which is available on our campaign website. We encourage you to review it and our definitive proxy statement before you vote.

If you too think ValueVision can be better than it is, please vote on the GOLD card and vote for our nominees.

Thank you for your consideration,

Gregory P. Taxin

ShopHQ’s current management, under siege, then filed papers with the Securities and Exchange Commission “in order to set the record straight on the Clinton Group’s misleading and self-serving assertions,” it told the regulatory body.

The home shopping network went point by point disputing The Clinton Group’s claims and criticism.

ShopHQ claims that its strategy is working and, for example, that it has developed many successful proprietary brands, despite The Clinton Group’s claims to the contrary. Check it out, and you decide.

ShopHQ’s Dissident Shareholders Plead Their Case In Slick Video

May 15, 2014

ShopHQ’s dissident shareholders, hell-bent on ousting the home shopping network’s CEO Keith Stewart, have taken a very unusual step. They have launched a website featuring a video of their nominees for ShopHQ’s board.

The Clinton Group has nominated six people — including several TV veterans — to be ShopHQ’s directors and is soliciting votes for them at the company’s June 18 meeting.

The video and Clinton Group’s other proxy materials are available at Take a gander.

The Clinton Group nominees for ShopHQ’s board include former HSN CEO Mark Bozek, who does most of the talking during the video.

Another nominee who we once interviewed in our prior life at Multichannel News, reality TV king Thom Beers, does his pitch with one of the Emmys he won during his career sitting in front of him. Beers is now CEO of FremantleMedia North America, the producer of “American Idol” and “America’s Got Talent.”

Board nominee Tommy Mottola, described as “the iconic former Chairman and CEO of Sony Music Entertainment,” also eloquently talks and appears in the video. He is the ex-husband of diva Mariah Carey.

The nominees Ron Frasch, the former President and Chief Merchandising Officer of Saks Fifth Avenue; Bob Rosenblatt, the former President of HSN and Tommy Hilfiger and CFO of Bloomingdale’s; and Fred Siegel, the former SVP of marketing at QVC, are also in the video picture.

“We believe ValueVision can be a great and highly profitable business, and one that creates tremendous value for shareholders,” Clinton Group President Gregory Taxin said in a statement Wednesday. “We encourage all ValueVision shareholders to read our materials and watch the video at”

Along with the definitive proxy statement, The Clinton Group will soon be mailing this cover letter to ShopHQ shareholders.

We are investors alongside you in ValueVision Media Inc. (“ValueVision” or the “Company”). We believe the Company has a terrific collection of assets that can be operated in a way that creates significant shareholder value. We are seeking to replace a majority of the current directors of the Company to foster a new vision and strategy for ValueVision that we believe can help us all by generating sustained profits and share price appreciation.

We believe the Company and Board of Directors are not doing enough with the Company’s assets and that the current Board suffers from a lack of ambition. Reading the Board’s recent letters and proxy statement, we cannot help but conclude that the current directors are very content with the Company’s market position and financial performance. The Board touts, for example, that the Company is now losing less money each quarter than it once did. Color us unimpressed. The current Board has declared victory while the Company languishes as a declining, third-place market share player in a three-company market.

In our view, five years into the tenure of the Chief Executive Officer, Keith Stewart, the Board should only be satisfied by consistent profitability and sustained value creation for shareholders. Instead, doing slightly less bad is seemingly enough.

Not for us. We are disappointed by the performance of the Company and its leadership team.

ValueVision stock trades today at approximately one-third the average price for which it traded during the ten years prior to Mr. Stewart’s tenure. The Company is valued by the stock market at a mere tenth of HSN and a thirtieth of QVC. And, while ValueVision stock has moved sideways since January 2010, HSN and QVC have generated significant value for their stockholders, including substantial and growing profits.

The current Board seems to focus exclusively on the stock performance during the first eleven months of Mr. Stewart’s tenure, from the financial crisis low in January 2009 to a rebound in December 2009. While it is true that ValueVision’s stock price bounced off its bottom of mere pennies per share during the period of the financial crisis, so too did the stocks of scores of other companies. Since then, however, ValueVision’s stock price has been essentially flat. For how long will the Board allow Mr. Stewart to produce no returns for stockholders just because the stock recovered from its financial-crisis bottom in the back half of 2009?

With respect to the fundamental financial performance of the Company, the Board appears satisfied with declining losses, though we know that shareholders cannot survive on losses, no matter how small. And how disappointed must Mr. Stewart be? After all, Mr. Stewart himself declared confidently that he could grow the business into a $1.1 billion revenue generator, producing more than $12 of sales per year on average in each home in which the Company’s programming was available. Mr. Stewart repeatedly stated this goal in 2009, 2010 and 2011. And, frankly, by many measures this was a rather modest goal: HSN generates $24 of sales per year per home, and QVC substantially more. Even ValueVision itself generated more than $10 of sales per home in every fiscal year from 1999 to 2007.

But, alas, Mr. Stewart did not achieve his financial performance goals. Or come close. Last year, the Company generated just $640 million in revenue, or $7 in sales per home, 40% below his own target. Moreover, fully five years after Mr. Stewart was put in charge, and despite his repeated predictions of operating cash flow margins in double digits, the Company continues to lose money.

While HSN and QVC have increased revenue, sales per home, gross profit and EBITDA in the United States compared with their pre-recession levels, ValueVision is a diminished version of its former self; on all these critical metrics, ValueVision is performing worse than it did in 2006. It is no wonder, then, that the stock has not recovered to its 2006 year-end level of $13. Or even half that.

Yet, the Board says it is satisfied and that we (and you) should be too. Well, we are not.

We are, more precisely, gravely disappointed by the Company’s record of losing money in 20 out of the last 21 quarters. We do not equate losing less money with success and we are concerned about a stock price that has not recovered to even half of its pre-recession level. We are worried about the lack of a plan to reverse these trends or, seemingly, even a recognition of the need for change. And, we are disappointed in the Chief Executive, who has missed his own stated goals by a wide mark and has been lapped by the industry leaders, who continue to grow their share through innovation. (We note that Mr. Stewart missed the Company’s target performance by such a wide mark in three of his five years as CEO that he failed to earn any annual incentive bonus in those years.) If Mr. Stewart and the Board have a vision for break-out performance and distinguishing the Company from its recent history or its competitors, we have not heard it.

We think losing money every quarter while the stock price moves sideways calls for a hands-on, energetic management team with a detailed turnaround plan. Instead, the Company’s Board permits no fewer than nine of the senior officers (including the President, the Chief Operating Officer, the Chief Financial Officer and the Chief Merchandising Officer) to literally “phone it in” one or two days per week while they “work” from their homes, many more than 1000 miles from the Company’s headquarters. Since when do million-dollar-per-year executives only have to show up for work a few days a week? Is it possible that the Company has not achieved Mr. Stewart’s own goals or stemmed the loss of market share because the executive team is not in Minneapolis, working with their direct reports, vendors, on-air talent and the finance team consistently, Monday through Friday?

We fear this lackadaisical approach to corporate management is, sadly, just part of the problem. The bigger issue is that the Board and executive team do not have a strategy to break the pattern of under-performance.

We do. We believe this situation calls for new directors with deep industry experience and judgment.

The Clinton Group has therefore nominated six independent professionals to serve on the Board of ValueVision. None of these nominees is an employee of the Clinton Group, nor does any have any other tie to our firm. They each do have notable and relevant backgrounds and together can form the backbone of a fresh new Board, implementing what we believe is a plan for success. We trust that these nominees will serve the interests of all shareholders.

ShopHQ’s Dissident Group Puts Up Slate To Dethrone Keith Stewart

April 26, 2014

ShopHQ’s dissident shareholders have renewed their assault on the home shopping network’s current management team, including $1.3 million CEO Keith Stewart, putting up its own slate of directors to oust the incumbents. It looks like a showdown.

On Thursday the Clinton Group filed a proxy statement with the Securities and Exchange Commission with its nominees for ShopHQ’s board — reality TV producer Thom Beers, former HSN head Mark Bozek, Ronald Frasch, record mogul and ex-Mariah Carey hubby Tommy Mottola, Robert Rosenblatt and Fred Siegel.

In pretty brutal language, the Clinton Group skewered Stewart over his tenure at the No. 3 home shopping network.

Keith Stewart in happier days

Keith Stewart in happier days

How do you like these apples, Keith? Here’s a snippet from the SEC filing.

The current Chief Executive Officer, Keith Stewart, was hired by the Company in August 2008 and became Chief Executive Officer in January 2009. In our view, while Mr. Stewart and his executive team have been in place, the business has not grown as projected by the Company nor, in our view, taken sufficient advantage of its opportunities.

During investor presentations in 2009, 2010 and 2011, Mr. Stewart and his team spoke of a future in which the Company would generate $1.1 billion of revenue, or $12 to $13 of revenue per home in which the ValueVision programming was available. However, revenue has not grown to these levels.

Instead, the Company generated just $640 million in revenue in the year ended February 1, 2014 (Fiscal 2013). The Company generated more revenue eight years ago (among other times) when its programming was available in 35% fewer homes.

But in Fiscal 2013 (and throughout Mr. Stewart’s tenure), the Company’s revenue amounted to just $7 per home. On this critical revenue metric, the Company’s current performance is worse than it was during the year Mr. Stewart joined the Company.

And, the Company generated more than $10 of revenue per home in every Fiscal Year from 1999 to 2007, prior to the tenure of nearly all of the current directors and Mr. Stewart.

Moreover, the Company’s current $7 revenue production per home significantly lags behind that of HSN and QVC, the Company’s principal rivals, who generate $24 and $60 of revenue, respectively, per American home in which their programming is available, according to the Company’s latest Management Presentation.6

On measures of profit, the Company has similarly under-achieved its previous performance and its previously announced goals … During Mr. Stewart’s tenure – consisting of 20 reported quarters of earnings – the Company has generated positive net income in just one quarter and has lost a cumulative $145 million. Over the same period, both HSN and QVC have generated significant and increased profits.

And here is what the Clinton Group’s directors plan to do:

* replacing the Chief Executive Officer (namely Stewart)

* changing the mix of merchandise offered to customers, reducing the percentage of merchandise in the jewelry, watch and electronics segments (which have historically been characterized by high selling prices and high return rates), and creating additional vendor relationships with brands and manufacturers in other categories such as beauty, health, fitness, fashion, accessories and home;

* establishing a New York City merchandising presence, enabling greater access to proprietary product from celebrities, musicians, personalities and well-known brands

* broadcasting some live selling events from locations throughout the world, including New York City and Los Angeles, to facilitate the acquisition and development of high margin, proprietary brands and notable, on-air talent

* marketing the SHOP HQ brand and service through public relations, off-asset marketing and through live events, promotions and innovative use of multi-channel, social media

*innovating new programming approaches to distinguish the SHOP HQ brand from those of rivals HSN and QVC (as well as other eCommerce companies), including by adding programming that involves integrated social commerce and cost-effective, shopping-centric entertainment across multiple platforms.

On Friday, ShopHQ shot back with its own SEC filing.

“The Board does not believe the Clinton Group’s nominees or proposals are in the best interests of all of our shareholders and does not endorse any of them,” ShopHQ’s current management said.


ShopHQ’s D-Day With Dissident Shareholders Is March 14

January 26, 2014

ShopHQ’s battle with a group of dissident shareholders, who want to unseat the shopping network’s current management — including CEO Keith Stewart — will come to a head March 14.

That’s when the network, whose corporate name is ValueVision Media Inc., has set a special shareholder meeting to vote on some the The Chinton Group’s proposals, which include ousting most of the channel’s board and essentially taking control of the company.

ShopHQ filed a proxy statement it is sending out to its stockholders, asking them to vote down the The Clinton Group’s, with the Securities and Exchange Commission Friday.

You can read all the dirty details here.

But here is some of the dish here, where ShopHQ tells its shareholders, “The future of ValueVision is in your hands.”

“Your Board of Directors is deeply committed to the Company, its shareholders and enhancing shareholder value,” ShopHQ says in its proxy statement.”

Keith Stewart in happier days

Keith Stewart in happier days

Company officials defended their track record at the home shopping network.

“We have focused on four key growth drivers: (1) broading and diversifying our product mix with a compelling assortment of national brands and proprietary products; (2) increasing our visibility to customers by expanding and optimizing our TV distribution platform; (3) growing our customer base through new customer acquisition, and increased purchase frequency and retaining existing customers reflecting improvements to overall customer experience; and (4) being a Watch & Shop Anytime, Anywhere experience through continued enhancements to our internet and mobile platforms,” ShopHQ said.

ShopHQ then went on to criticize The Clinton Group.

“In the Board’s opinion, the Shareholder Group’s proposals are not in the best interests of ALL shareholders of the Company, but rather were made in furtherance of the Shareholder Group’s own interests. If the Shareholder Group, a minority group of shareholders beneficially owning approximately 9.8% of the Company’s shares, were to succeed in this proxy contest, then the Shareholder Group’s nominees would control over 80% of the seats on your board.”

“The Shareholder Group has not offered to purchase a controlling interest in the Company nor offered to pay the Company’s shareholders any control premium for the privilege of having the Shareholder Group’s nominees control your board. For these reasons, among others, the Board is soliciting proxies against the Shareholder Group’s proposals.”

In November The Clinton Group went after ShopHQ’s management, criticizing the progress, or lack thereof, of, of the No. 3 home shopping network.

In a nutshell, the group is looking to replace a good number of the network’s with its own crew, which includes some rather notable people, including Mariah Carey’s ex-husband, music mogul Tommny Mottola; he-man reality TV producer Thom Beers; and ex-HSN CEO Mark Bozek.

According to ShopHQ’s SEC filing, Stewart received $1.566 million in compensation in fiscal 2013.

We’ll see how this plays out.

Shareholders, Saying ShopHQ Is Trying To Mislead Them, Agree To Jan. Meet

November 10, 2013

ShopHQ’s dissident shareholders have given the home shopping a little delay in its call for special meeting, until after Christmas. The group, along with a few stinging remarks, said it will agree to have the meeting in January.

The Clinton Group, which owns about 10 percent of ShopHQ, late last week sent a letter to the home shopping network’s chairman in response to his request that the shareholders withdraw their demand for a special meeting.

The Clinton Group is seeking the meeting in a bid to remove a majority of the ShopHQ’s directors, expand the board to nine members and elect seven independent nominees. ShopHQ, whose corporate name is ValueVision Media, asked the group to drop its request because a special meeting could distract management during the company’s important holiday selling season.

In its response, the Clinton Group said that under Minnesota law, the board has discretion to set the special meeting in late January, five weeks after Christmas. If the board set such a date, the Clinton Group has offered to delay its proxy solicitation activities until January to ensure the network could focus on the holiday selling season.

The shareholders also said that the board’s proposal – that the Clinton Group voluntarily withdraw its request for a special meeting and re-file the request in February – would allow the board to set a special meeting date as late as early May. The Clinton Group said it does not believe such a delay is in the interests of shareholders.

The Clinton Group didn’t pull any punches in its letter to ShopHQ.

“With the sympathetic public plea that Christmas is in seven weeks, the Company is surreptitiously seeking up to a six-month delay in holding the Special Meeting,” The Clinton Group said.

“We will not be so easily misled or give up our rights as shareholders in a Minnesota corporation. We do not believe shareholder interests are well served by a delay. If avoiding distractions during the holiday shopping season is your true motivation, we reiterate our suggestion to call a late January meeting.”


Here is the full letter:

Mr. Randy S. Ronning
ValueVision Media Inc.
6740 Shady Oak Road
Eden Prairie, MN 55344

Re: Your Request For Up to a Six-Month Delay in the Special Meeting

Dear Mr. Ronning:

As you know, Clinton Relational Opportunity Master Fund, L.P., together with its affiliates and group members (“Clinton Group”), is the holder of more than 10% of the voting power of all shares of ValueVision Media Inc. (the “Company” or “ValueVision”).

On Monday, November 4, 2013, the Clinton Group submitted a notice calling for a Special Meeting of shareholders (the “Notice”) at which shareholders would be able to consider various proposals, including the removal of a majority of the Company’s directors, the expansion of the Board to nine members and the election of seven independent professionals who possess deep industry experience (the “Nominees”).

As we outlined in our Notice, we believe the Nominees – three of whom have held senior executive positions in the home shopping business, including as CEO of HSN, and two of whom are iconic leaders in the entertainment and media business – can be extremely valuable in helping the Company develop and implement a growth strategy and in identifying a new executive team with a track record of success and the vision, ambition and energy to make ValueVision a premier multi-platform retailer. We are pleased that so many of our fellow shareholders have reached out to us to discuss our proposals since they were announced.

In your letter today, you asked us to withdraw our Notice on the premise that a Special Meeting during the holiday season could distract management. As large shareholders of the Company, we have no interest in diverting the attention of management or keeping the Company from executing well, now or ever.

Accordingly, in a phone call yesterday between our respective representatives, we suggested that the Company exercise its discretion under Minnesota law to hold the Special Meeting of shareholders at the end of January, five weeks after Christmas. Furthermore, we offered that we would not begin to solicit our fellow shareholders until after the holidays (provided that the Company similarly refrains from solicitation), so that the Company could remain focused on executing its business plan.

But instead, ValueVision clarified its real desire is for us to voluntarily and unilaterally withdraw our Notice entirely and re-file it in February. Although your public letter did not say so, under Minnesota law, a February filing would permit the Company to schedule the Special Meeting as late as early May.

With the sympathetic public plea that Christmas is in seven weeks, the Company is surreptitiously seeking up to a six-month delay in holding the Special Meeting. We will not be so easily misled or give up our rights as shareholders in a Minnesota corporation. We do not believe shareholder interests are well served by a delay. If avoiding distractions during the holiday shopping season is your true motivation, we reiterate our suggestion to call a late January meeting.

So there!

ShopHQ Defends CEO Keith Stewart, Calls For Peace For Xmas

November 6, 2013

Here is the latest chapter in the brouhaha between ShopHQ’s dissident shareholders and the beleaguered home shopping network.

On Tuesday ShopHQ, formerly ShopNBC, issued a response to The Clinton Group’s demand for a special meeting of shareholders of ValueVision, i.e. the network.

The group, which is calling for ShopHQ to can CEO Keith Stewart, wants to take control of the network’s board by removing five of it seven current directors. ShopoHq’s management is asking for The Clinton Group to postpone its call for a meeting after the Christmas season.

Here is part of ShopHQ’s response:

As a retailer, ValueVision’s busiest season comes during the holiday season, which is now upon us. The holiday season also coincides with our fourth quarter, which ends on February 2, 2014. It is vitally important for our management team to remain laser focused on executing our company’s strategy in order to maximize value creation for our shareholder base as a whole. We believe that the interests of all of our shareholders are aligned in this goal.

The purpose of this letter is to respectfully ask that you withdraw your request for a special meeting until after the end of the holiday season so that our management can devote its full energy to running the company at this important time.

Keith Stewart

Keith Stewart

The request to call a special meeting of shareholders will cause needless distraction for our management team, which we would prefer to remain focused on our business. In the meantime, we would be happy to begin evaluating the candidacy of your proposed directors if you would submit their qualifications and an indication of their willingness to serve to our Corporate Governance and Nominating Committee.

Your colleagues first contacted our management this past September and first spoke with Sean Orr and me on October 21, 2013. We have made ourselves available for continued discussions and have offered to consider candidates you submitted. We believe we have evidenced a willingness to work with you constructively, and we ask that you return the favor, for the benefit of all of ValueVision’s shareholders.

Thank you for your consideration of this request; we hope that after further thought, you will see the value in our position.

Randy S. Ronning
Chairman, Board of Directors

ValueVision’s Board and management team have been and remain focused on the successful execution of the Company’s value-creating strategy, including four key business drivers to enhance performance and profitability:

* Broadening and diversifying product mix and brands to attract new and repeat business,

* Optimizing ValueVision’s TV distribution platform to reach more customers and to deliver greater productivity from the Company’s distribution footprint,

* Improving customer service, systems, responsiveness, content and community to support the growth and retention of the customer base, and

* Building and enhancing the consumer TV, online and telephone experience to create an immersive, compelling “Watch & Shop Anytime, Anywhere” experience.

In January of 2009, Mr. Stewart was installed as Chief Executive Officer with the mandate to execute a turnaround of ValueVision, which at that time had an uncertain future. For the fiscal year ended January 31, 2009, the Company generated an Adjusted EBITDA loss of $51 million.

Mr. Stewart has assembled an entirely new team of retail and multichannel veterans to lead the Company. In addition, the composition of the ValueVision Board was substantially refreshed, including the appointment of four new independent Directors to the seven-member Board in the last two years.

This new Board and management team implemented a restructuring of the company’s operations, its cost structure and its balance sheet, putting it on a solid financial and operating footing. On the most recent trailing twelve month basis, the Company has achieved positive Adjusted EBITDA of over $14 million.

The execution of ValueVision’s turnaround strategy has resulted in the outperformance of the Company’s stock relative to the Russell 2000 index and strong performance relative to peers. Since Keith Stewart’s appointment as CEO in January 2009 through Clinton’s 13D filing on October 30, 2013, the Company’s stock has outperformed the Russell 2000 by almost 800%, and has outperformed it by more than 70% and 115% in the three years and one year prior to Clinton’s filing, respectively.

Furthermore, over the three years and one year prior to Clinton’s filing, the Company’s stock has outperformed its closest publicly-listed peer by 50% and 140%, respectively.

So there, Clinton Group!

Shareholders Call For ShopHQ To Can CEO, But It Says No, No, No

October 31, 2013

ShopHQ CEO Keith Stewart had a bad day Wednesday.

That’s what happens when a dissident shareholder group files a letter with the Securities & Exchange Commission calling for your board to replace you because of your skunky performance. In fact, those stockholders want you gone so badly that they offer to invest $25 million in the company once you are gone.

The shareholders, Clinton Group Inc., own 5 percent of ShopHQ, whose corporate name is ValueVision Media Inc. Clinton Group sent a letter to ShopHQ Chairman Randy Ronald blasting Stewart’s performance of head of the home shopping network.

Here is the full text of the letter, which is a real scorcher in regard to Stewart.

The letter initially complimented for its wide cable and satellite distribution. That was the good news. Then came the bad news from the shareholders.

Despite cable and satellite distribution that is nearly as good as that of HSN, the Company’s enterprise value is about one-tenth that of HSN.

We do not believe the asset is the problem.

Instead, as we have said, we believe that the Company has exploited that asset poorly and has dramatically under-performed its direct rivals, to say nothing of the Company’s potential. When Keith Stewart, the Company’s Chief Executive Officer, joined the Company, he declared that he was “going to change” the Company’s “business model” and its “poor execution.” Neither has happened.

Instead, Mr. Stewart missed nearly every long-term projection and metric he offered during his tenure. As we noted, for example, his publicly stated goal was to create a company with more than $1 billion in revenue with 8-12% EBITDA margins by now. He missed both targets by a country mile.

In the meantime, as we have discussed with you, we believe the Company has fallen further behind its competitors in terms of market share (of both revenue and gross profit dollars) and has failed to return to pre-recession levels of revenue, unlike most retailers, eCommerce companies and both of its home shopping network rivals.

This performance gap has been caused, in our view, by a failure to innovate and differentiate the Company from its peers and repeated failures to hit customer count, penetration rate, distribution cost, operating expense and profit targets over the past four years.

Mr. Stewart and his management team, many of whom we understand work from home, 1000 miles or more from the Company’s headquarters at least two days per week, have in our view abjectly failed to build significant proprietary brands, expand product assortments sufficiently, diversify the program schedule, optimize the product mix and retain key successful vendors.

Recently, the Company – which refers to itself as a “multi-channel retailer” – was ranked dead last among such companies for its mobile website.

Ouch! And we thought our bosses were tough.

But the beat went on. Here are more excerpts from the letter:

Since January 2010 when Mr. Stewart declared that “executed correctly, the [home-shopping business] is the most profitable form of retailing,” the Company has lost $100 million and has reported just a single profitable quarter.

HSN, during that same period, has earned $400 million. And although Mr. Stewart proclaimed that he “fully expect[ed] to double our business over [a] three-to-five year period,” in March 2010, the three-year growth has turned out to be just 11%.

Mr. Stewart has a record of overpromising and under-delivering. On nine separate occasions since 2009, as we indicated during our presentation to you, Mr. Stewart has stood before shareholders and proclaimed the “turnaround” of the Company was well underway or complete.* Sadly, for shareholders, the stock has underperformed the Russell 2000 and HSN since every one of those nine declarations.

That is not to say that Mr. Stewart has not done some good and important work for the Company. The Company was in bad shape when Mr. Stewart arrived and he rightly gets credit for keeping ValueVision afloat. But he has not hit his own targets, optimized the operations or maximized the returns to shareholders. And now, he has no discernable strategy to lift the Company from its distant, third-place (and shrinking) market position.

Accordingly, as we have said to you, we believe the Board should replace Mr. Stewart to enhance operational performance and to pursue a new strategic path. We advocate this not because we are ungrateful to Mr. Stewart for his past stewardship of the Company, but rather because gratefulness has no place in picking the future leader of ValueVision.

The Board’s obligation, it seems to us, is to ensure the Company has the right leader for the future: a leader with entrepreneurial energy; strategic vision; a track record of operational excellence and exceptional performance; and credibility with investors, vendors and employees. We do not believe that person is Mr. Stewart.

The Clinton Group apparently has someone in mind to replace Stewart. Damn, who is it?

From the letter again:

We also are in a position to recommend to the Board several experienced executives with deep, relevant domain expertise and impeccable reputations to serve as Board members to augment the existing Board.

These individuals bring expertise in areas as critical as merchandising, marketing, television production and entertainment, eCommerce and finance. Several of them are iconic leaders in the convergence of media, eCommerce and entertainment and several are well known to the Company’s other shareholders.

That said, with the existing Board’s approval and subject to the completion of due diligence, we would be prepared to put our capital where our mouth is. We would be pleased to make a fresh, primary, minority investment in the Company of at least $25 million at a substantial premium to the stock price if the Board would accept our recommendation and replace Mr. Stewart and upgrade the Board significantly.

ShopHQ shot back later in the day, and here is most of its response:

We are disappointed that Clinton has decided to publish its letter, especially in light of our continuing dialogue. ValueVision has a long record of engaging with shareholders, and members of the Company’s Boar of Directors and management team have engaged in numerous discussions with Clinton since early September, when Clinton first contacted ValueVision.

During the course of these discussions, the Board made clear that it fully supports ValueVision’s management team and its successfulexecution of the Company’s strategy of building sustained growth through customer engagement. Importantly, the Board and management team are confident about the future trajectory of the business.

Since the appointment of Keith Stewart as CEO in January 2009, substantial shareholder value has been created, as demonstrated by an over 940% increase in ValueVision’s share price, from $0.52 to $5.42 as
of yesterday’s market close, as a result of the successful implementation of the Company’s turnaround strategy.

During the same time period, the Russell 2000 Index increased by approximately 150%. ValueVision’s management team, working closely with the Board of Directors, has streamlined operations, improved the quality of the Company’s TV distribution footprint and significantly enhanced the stability and flexibility of its balance sheet, resulting in stronger financial performance.

In addition, ValueVision’s diversification of merchandise and investment in customer centric programs has resulted in an 11% increase in rolling 12 month customer counts and a 10% increase in year to date sales, as of the second quarter of 2013.

Clinton has failed to recognize or acknowledge that the major elements of ValueVision’s turnaround have been addressed and that the Company has delivered improved performance in a number of important financial and operating metrics. Moreover, Clinton has failed to provide any concrete suggestions or recommendations to improve ValueVision’s business and strategy going forward.

ValueVision’s Board and management team remain committed to enhancing value for all shareholders and welcome input from shareholders toward that goal. We will take the time necessary to thoroughly evaluate the Clinton letter while continuing to focus on the successful execution of ValueVision’s business plan to enhance our operating and financial performance.

So there, Clinton Group!