Liberty Interactive, the parent company of QVC, has acquired the majority of HSN Inc., merging two retail giants that built empires on selling products 24/7 on television.
Despite this legacy, approximately half of the combined companies’ $14 billion revenue now comes from e-Commerce, and the brands are determined to make an even bigger push within mobile, digital video content and OTT (over-the-top) platforms. Together, QVC and HSN will form the third-largest e-Commerce company in North America by sales, behind Amazon.com and Walmart, according to eMarketer.
Upon the merger’s completion, Liberty Interactive plans to spin off its cable operations into an independent company and rename itself QVC Group. This business will include the flash sale retailer zulily, which QVC bought for $2.4 billion in 2015, and HSN’s Cornerstone division, which includes home retailer Ballard Designs, among other brands.
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Liberty Interactive currently owns 38.2% of HSNi and, under the agreement, will acquire the remaining 61.8% stake, making it a wholly-owned subsidiary.
“Every year [QVC and HSN] together produce more than 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT (over-the-top) platforms,” said Greg Maffei, President and CEO of Liberty Interactive in a statement. “The value of the combined QVC, HSNi and zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
Liberty Interactive also believes the acquisition of HSNi will provide:
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Increased scale, enhancing the competitive position of QVC Group;
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Cost reduction and revenue growth opportunities;
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Optimized programming across five cable television networks in the U.S.;
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Cross marketing to better engage existing and potential customers; and
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Greater financial options due to HSNi’s lower debt leverage.
Arthur C. Martinez, HSNi’s Chairman of the Board of Directors, said the acquisition will give his company instant access to global consumer markets and an opportunity to further strengthen its content-based brand portfolios.
After the closing, HSNi headquarters will remain in St. Petersburg, Fla. and will be overseen by QVC President and CEO Mike George. Mindy Grossman, the former CEO of HSNi, stepped down from the position in May to take on the lead role at Weight Watchers International Inc.
QVC plans to take $50 million to $70 million in restructuring charges spread out over the next three years, and expects to see cost savings of $75 million to $110 million annually from the deal within three to five years.
