Posts Tagged ‘Gems TV’

The Dumping of Louis Dell’Olio And Charla Rines Sparks Customer Outrage At QVC And ShopNBC: How Shifts In Strategy Can Alienate Shoppers

April 18, 2010

Charla Rines

We’ve chronicled two instances now where customers of QVC and ShopNBC have become livid, and threatened to boycott those networks, because the two channels were getting rid of two popular personalities.

In the most recent brouhaha, more “mature” QVC shoppers were ready to tar and feather QVC president Mike George and John Malone and Gref Maffei, who run QVC’s parent Liberty Media, when they got word that the home shopping channel was dropping designer Louis Dell’Olio’s line.

Linea Ladies (named after his QVC Linea collection) this week mounted a focused campaign to keep Dell’Olio on the air, setting up a Twitter account, bombarding the offices of George and Malone with phone calls, and writing to these executives.

Who knows what will happen ultimately. Campaigns like this, no matter how passionate the protesters, seldom work.

But the “Ladies” seem to have made some progress last week on behalf of Dell’Olio. The award-winning designer wrote on his blog Friday that QVC officials now want to meet with him to discuss the future of his line for them. Prior to that, Dell’Olio said that QVC had informed him that it would stop placing orders for his line in the fall.

Customer relations are not much better at ShopNBC, where angry viewers are still shocked that the No. 3 shopping network canned spike-haired Rines, a loud-mouthed but popular host, back in January. Our blogs about Rines have received the most traffic of any items on this site, and more than 80 people have posted comments damning ShopNBC for letting Rines go.

These ShopNBC customers are also posting that the network had gone down the toilet in terms of the quality of its merchandise, especially the high-end jewelry that Rines used to do presentations on.

What’s going on here? You are seeing customer reaction to major changes in strategy at both QVC and ShopNBC.

Mindy Grossman

HSN is making similar changes, but even when veteran vendor Suzanne Somers left last fall after more than a decade at the network, there was no viewer ire. We guess that’s because she had her new home-shopping gig set up — moving over to ShopNBC.

With the recession, it’s a tough environment out there for home shopping networks. Gems TV went black last Thursday, and has filed for Chaper 11 bankruptcy protection. QVC, HSN and ShopNBC obviously don’t want to suffer a similar fate.

All three home shopping networks have shifted their strategies. For one, they have changed their product mixes to include less jewelry (which apparently no one but us is buying nowadays) and much more beauty and consumer electronics producs.

QVC and HSN are going in similar directions in many respects: In particular, they are replacing their older clothing lines with hipper fashions by younger designers. So for example, you have HSN CEO Mindy Grossman bringing in higher-end design talent like Badgley Mischka, Naeem Khan and Stephani Greenfield to the network.

In the case of QVC and Dell’Olio, he makes gorgeous classic tailored clothes, the kind of garments that women my age love. But QVC is trying to attract new, younger viewers, and has brought in more fashion-forward designers such as Isaac Mizrahi and Chloe Dao with their edgier fashions.

Linea Ladies pointed out to QVC that they have lots more disposal income than the kids, and that younger shoppers are fickle and unloyal. Good points.

If you read QVC’s online forums, you will soon learn that the Linea Ladies don’t like the new designers like Mizrahi, and that they feel they are being swept aside in the home shopping channel’s push to draw new shoppers. And these women are probably right.

Keith Stewart

That age issue is also at the center of customer anger over ShopNBC letting Rines go: She was not a 20-something, she was maybe a 50-something. The new generic, picture perfect hosts that ShopNBC has hired just don’t cut the mustard, according to Rines’s fans.

With her bright red lipstick and short platinum blonde hair, Rines didn’t look or act like any other host on a home shopping channel. She was outspoken, blunt, sarcastic and had a real edge to her. She drove us nuts sometimes, but at least she didn’t have the nauseatingly sweet, unskeptical persona of many home-shopping network hosts.

ShopNBC’s situation, except for it getting rid of an older talent, is opposite of QVC’s and HSN’s. Chief Keith Stewart is trying to make the No. 3 home shopping channel less upscale, lowering the average price of its merchandise. You won’t see many $20,000 rings being sold on ShopNBC now, the way you used to.

And he is widening ShopNBC’s product mix to be more like QVC and HSN, in that the No. 3 home shopping network is now selling gourmet food and even 3D HDTV sets (before its two rivals did).

All three home shopping channels will soon be reporting their first-quarter earnings. They have been seeing rising sales, so maybe their new strategies are working.

But their core customers are not happy. And those are the shoppers that they depend on to come back again and again.

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DirecTV’s Suit Against Gems TV: Who Claims What

April 8, 2010

Well, the love is sure gone between DirecTV and soon-to-be-shut-down Gems TV.

Gems TV made its U.S. debut on DirecTV in November 2006. At that time, DirecTV lauded the network.

“[GemsTV’s] innovative reverse-auction format is unprecedented in the history of American television and offers viewers a fun and easy way to shop for high-quality gemstone jewelry from the comfort of their own homes,” said DirecTV EVP of programming acquisitions Dan Fawcett, a straight-up guy who we know from our days covering cable.

But that was then, and now is now.

Before Gems TV, which is ceasing operations, filed for Chapter 11 bankruptcy protection on Monday, DirecTV had already been in court and won a restraining order barring the home shopping network from taking any action that would leave the channel with less than $25 million in money or assets, until further order of the court. Presumably, DirecTV believes it is owed that same $25 million.

DirecTV’s lawsuit has been stayed pending the bankruptcy proceeding, but we got a look at it. Large portions of the suit have been “redacted,” or blacked out. Those include the details of DirecTV’s carriage agreement with Gems TV. The suit charges Gems TV with breach of contract and fraudulent conveyance.

Basically DirecTV, which brought Gems TV to 18 million homes, was trying to stop the network from moving all its assets to the Cayman Islands — out of the reach of creditors.

In February, Gems TV came to DirecTV and asked to renegotiate their carriage deal, telling the satellite provider that it “was losing money and might be forced to discontinue their programming activity,” according to the suit.

DirecTV refused to amend or modify the contract. On March 8, Gems TV gave DirecTV written notice that it was terminating their contract because the network was in fact going black. The satellite company says that’s a breach of contract.

In one of the exhibits, a letter dated March 19 to DirecTV’s Toby Berlin, Gems TV president (and Charter Communications alum) Diane Schneiderjohn said that under their carriage deal, the pact can be terminated if the programmer “discontinues operation and distribution of the service.”

She writes that Gems TV will cease operations April 15, and therefore there is no breach of contract.

Around this time, DirecTV learned that Gems TV was planning to invest $60 million in Multimedia Commerce Group, which operates Jewelry Television. “Gems TV thus seeks to transfer its assets in a fashion that will leave no assets available to compensate DirecTV for damages caused by Gems TV’s breach of the contract,” according to the suit.

The transfer of assets to the Cayman Islands or to invest in JTV “is undertaken in bad faith and constitutes fraudulent transfer,” DirecTV alleges.

That investment was a way for Gems TV to liquidate the rest of its inventory, by taking it to JTV, according to DirecTV’s suit.

This may all be moot now, to be decided by a bankruptcy judge. In its Chapter 11 filing, Gems TV claims to have $51.2 million in assets and $120 million in debt, all unsecured.

Gems TV To Shut Down And Buy Stake In Jewelry Television, And An Unhappy DirecTV Files Suit And Gets Restraining Order

March 31, 2010

Thanks to a tip from one of our fans, we’ve wised up to the fact that financially struggling Gems TV is going black in the United States — and that DirecTV has filed suit against the home shopping channel over its demise.

Earlier this month Gems TV’s Singapore-based parent company, Gems TV Holdings Ltd., announced that it was ceasing the network’s operations and buying a 37.8 percent stake in its rival, Jewelry Television, known as JTV. Gems TV will end its operations whether or not its deal to buy into Jewelry Television, whose parent company is Multimedia Commerce Group Inc., closes.

“Since its entry into the U.S. in November 2006, Gems TV has struggled to achieve the necessary operational and economic scale that would enable it to thrive in that market,” the network said in its March 8 press release. “The Group’s margins and profitability have been under constant pressure from the extremely challenging and unpredictable economic environment.”

The press release also had a statement from Gems TV chairman Jason Choo.

“We are putting a stop to the operational cash drain in the U.S. which is clearly a disappointing outcome,” Choo said. “However, if the proposed investment completes, it will allow us to immediately increase our proportionate share of the U.S. jewelry market. Both parties believe that a significant portion of our revenue will migrate to MMCG once we cease broadcasting and MMCG is in an ideal position to leverage off that additional revenue.”

In the fiscal second quarter ending Dec. 31, Gems TV saw its product revenue drop 15 percent, to $40.2 million. Gross profit rose 27 percent, to $16.5 million. The loss attributable to shareholders was $6.3 million, down from $18.5 million the prior year.

Last Thursday Gems TV announced the satellite provider DirecTV had filed for a temporary injunction against it in U.S. District Court in California. There was also a retraining order issued barring Gems TV from taking any action that will leave the network with less than $25 million in money or assets, until further order of the court.

Gems TV said that DirecTV’s claims are without merit and that it will contest them. We couldn’t reach our buddies at DirecTV yet Wednesday morning: They are out in El Segundo, Calif.

JTV will incorporate Gems TV’s reverse-auction program with its existing fixed-price selling programs.

“I believe Jewelry Television represents the very best that the jewelry TV and Internet shopping industry has to offer consumers and is also a cut above the rest of the players, in terms of its established branding, market position and scale,” Choo said. “We are very confident that our proposed investment in JTV would give both parties the best vantage points from which to grow, and we look forward to sharing in the success of Jewelry Television.”