HSN, QVC merger could benefit industry and consumers

QVC's buyout of HSN is potentially good for both the industry and customers.

Liberty Interactive Corporation, parent company of QVC, has entered into an agreement to acquire the remaining 62% of HSNi shares it does not already own.

“We are excited to announce the acquisition of HSNi,” said Greg Maffei, Liberty Interactive president and CEO, in a statement. “The addition of HSN will enhance QVC’s position as the leading global video e-commerce retailer. Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms. 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.”

HSN founded the discovery-based shopping institution 40 years ago, and combining the brands will strengthen the acceleration of innovation while leveraging resources and talent, according to Mike George, QVC president and CEO. 

“As the prominent global video commerce retailer and North America’s third largest mobile and e-commerce retailer, the combined company will be well-positioned to help shape the next generation of retailing,” he said in the statement.

Liberty Interactive believes the acquisition will increase scale; increase development of e-commerce, mobile and OTT platforms; optimize programming across five U.S. networks; and offer cross-marketing to potential customers and financial optionality due to HSN’s lower debt leverage. 

The decision to complete a total buyout is a direct effect of the decline in TV viewership, according to Michael Levine, VP of marketing at Photon, an omnichannel digital experience provider for Fortune 500 companies.

“As advertising dollars shift to online—this year marked the first time digital ad spend was higher than traditional TV ad spend—and as new digital TV platforms emerge, traditional TV viewership will continue to decline,” Levine said. 

Levine also believes that QVC is the clear winner in this deal due to their scooping up of the competitor for fairly cheap. 

“My assumption is Liberty Interactive Corp. will leverage infrastructure and people to create more efficiencies in costs. I could very well see HSN quietly dismantled and QVC (the stronger consumer brand) remaining,” he added.

QVC's online sales make up 53% of total revenue, and Levine believes that number will only grow in the future. Online grew 5% in the first quarter of 2017, with an overall 2.8% decline in the business. 

“QVC has great potential to remain relevant, and an important retailer, as they already experience over 60% of e-commerce sales coming from mobile. Mobile is where the shopper has moved and QVC should own the shopper urgency with mobile shoppers the same way they have with traditional TV shopping. This is their stake in the future of retail and it's very attainable by leveraging their strong brand today,” Levine said.  

Stefan Weitz, executive VP of technology for Radial, believes the merger will also benefit consumers. 

"Ultimately, consumers want the largest selection in the fewest number of stops. Being able to go to one consolidated marketplace to get everything from opal bracelets to the latest printer will be a positive thing for them," Weitz said.