Is QVC’s acquisition of HSN more about TV shopping or e-commerce?
Liberty Interactive Corporation, the parent company of QVC, has reached agreement on a deal to acquire the remaining 62 percent of HSN, Inc. it does not already own in an all-stock transaction valued at roughly $2.1 billion.
The deal bringing the two networks under one corporate umbrella will create the largest television home shopping company in the world as well as the third largest e-commerce company in North America behind Amazon.com and Walmart. HSN and QVC will continue to operate as independent companies once the deal is finalized pending regulatory and shareholder approval.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth,” said Mike George, QVC President and CEO, in a statement.
Liberty has identified five benefits it expects from the merger of the two companies:
- Increased scale and synergies to reduce costs and drive revenue opportunities;
- Expanded development across its multiple sales platforms;
- Optimized programming across its five television networks in the U.S.;
- Newly created cross-marketing opportunities;
- Added financial flexibility due to lower debt levels.
Industry watchers say the merged company must move quickly to avoid losing ground to Amazon, Walmart and others.
“The consumers who buy on TV aren’t the ones who buy online,” Britt Beemer, chairman and CEO of America’s Research Group, told the Tampa Bay Times. “The youngest consumers don’t know who [QVC and HSN] are at all, so their interest has been minimal. They’re going to have to develop a whole new strategy to reach them if they want to expand their online discovery base.”
“Both brands already have large customer bases, but the real question will center on how they plan on locking their customers into the HSN-QVC ecosystem and stop them from going to competitors like Amazon,” said Tom Caporaso, chief executive of Clarus Commerce, in an interview with The Washington Post. “By building a premium loyalty program like Amazon Prime, the new converged brand could start to become a major threat to Amazon’s visions of total domination of the industry.”
- Liberty Interactive Enters into Agreement to acquire HSN, Inc. – Liberty Interactive Corporation
- HSN acquired by rival retail giant QVC for $2.1 billion – Tampa Bay Times
- QVC to merge with rival Home Shopping Network – The Washington Post
- For QVC and HSN, the Timing is Right – Bloomberg
DISCUSSION QUESTIONS: Is QVC’s acquisition of HSN more about TV shopping networks or e-commerce? Could the merged company pose a challenge to Amazon and Walmart.com? What do you see as the keys for the merger to prove successful?