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Trigaux: Can HSN, QVC prosper together to avoid becoming digital dinosaurs?

What corporate legacy comes to mind with Thursday's news that larger TV shopping rival QVC will scoop up St. Petersburg's HSN for $2 billion and change? Here are three to consider:

• A TV/digital retailer with a market value of more than $11 billion, QVC chose to gobble up its relatively puny rival in HSN in its moment of weakness, when its CEO had departed and its market value was little more than a 10th the size of its buyer.

• For all its promise as a digital innovator, a frustrated HSN watched in recent years as its shares lost momentum —peaking two years ago close to $70 only to droop to a low of $31.30 this past Monday.

• Retail phenom Mindy Grossman was recruited in 2006 by IAC boss Barry Diller to run HSN and revolutionize what was then his company's plain vanilla TV shopping subsidiary. She took HSN public in 2008, expanded its online presence and then abruptly left her St. Petersburg job at HSN earlier this summer just weeks before Thursday's deal with QVC.

RELATED COVERAGE: HSN acquired by rival retail giant QVC for $2.1 billion

If Grossman could not reinvent HSN, she now has the opportunity to reinvent herself as a winner, again.

She's teaming with billionaire media juggernaut, major Weight Watchers International shareholder and pitch-woman Oprah Winfrey to oversee a Weight Watchers turnaround. That stock already has more than doubled since the start of 2017.

Now HSN won't need to hunt for a new chief executive to succeed Grossman. HSN will be run by QVC CEO Michael George.

This deal should not come as a shock. QVC, via its parent Liberty Interactive, already owned 38 percent of HSN. Thursday's deal is really about QVC gobbling up the remaining 62 percent of HSN shares.

So here's the key question behind the QVC-HSN merger:

Can two TV/digital shopping businesses still trying to get back in the fast lane be any better at getting there as one newly merged company?

U.S. sales at QVC have been slipping in recent quarters. Net income is also under pressure, dipping more than 3 percent in the first quarter of 2017.

HSN's numbers are more humbling. Net sales for the first quarter fell 4 percent. And profitability plummeted — that's the killer — with net income dropping 26 percent.

On Thursday, HSN chief financial officer Rod Little told investors that his company "was not happy with its performance" and hoped that combining with QVC would make the business stronger.

"It's part of why we are here today, I guess," said Little.

QVC CEO George said the combined company would be "well-positioned to help shape the next generation of retailing."

RELATED COVERAGE: The internet's best jokes about QVC buying HSN

The "next generation" of retailing? A lot of smart people are trying desperately to figure out what that means. Dozens of major retail businesses are slowly imploding —think Macy's or Sears or JC Penney — or have already sought Chapter 11 bankruptcy protection — like Payless Shoes, HH Gregg and Wet Seal.

Can a soon-to-be united QVC and HSN succeed where so many others have faltered? QVC chief George told the Tampa Bay Times Thursday that his company brings "scale and resources" to the smaller HSN.

And what does HSN bring to the deal? Said George: "One of the things we're excited about is there's a lot of talent at HSN at all levels and we've gotten a chance to get to know a handful of the senior leaders over the past weeks and months."

It's a start.

But like all corporate buyers, QVC must cut costs to justify a $2 billion-plus deal. It sees between $75 million and $110 million in savings over the next three to five years. A good — but as yet unspecified — amount of that will mean job cuts.

Staff writer Malena Carollo contributed to this column. Contact Robert Trigaux at rtrigaux@tampabay.com. Follow @venturetampabay.

Trigaux: Can HSN, QVC prosper together to avoid becoming digital dinosaurs? 07/06/17 [Last modified: Thursday, July 6, 2017 3:50pm]
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