Shopping Channel Is an Easy Sell

The QVC shopping channel on Thursday was hawking, among many things, Shadow Fern area rugs ($39.19), Keds Smooth Stretch Slip-on Comfort Clogs ($28.40) and Sun Laboratories Instant Self-Tanning Spray ($19.93).

Over the years, such items have been very good to the channel, whose owner announced that control of QVC itself is being sold for a price that is far beyond what most of its viewers are accustomed to paying: $7.9 billion.

Once dismissed as a purveyor of kitschy merchandise, West Chester, Pa.-based QVC has evolved into a major cash cow for cable giant Comcast Corp., which said Thursday that it was selling its 57.5% stake to Liberty Media Corp. Last year, QVC took in more than $4 billion in revenue.

“QVC has been a spectacular performer over the past decade,” analyst Jessica Reif Cohen of Merrill Lynch wrote in a recent report. This year, she estimates, QVC will generate cash flow of about $900 million.

“One of the things that makes QVC so profitable is the fact that they have fixed operating costs,” said Larry Gerbrandt, senior analyst at research firm Kagan World Media. “Whether they have $100 million or $2 billion in sales, the TV programming doesn’t cost them any more to produce.”

A live talk-show format, often featuring celebrities, adds to its popularity.

Daytime soap opera star Susan Lucci has sold her hair-care system. Joan Rivers has advertised a line of women’s apparel. And Victoria Jackson has peddled her cosmetics.

“They talk; they take calls.... It’s addictive,” Gerbrandt said.

QVC Network was founded in 1986 by Joseph M. Segel, founder of Franklin Mint Corp., the mail-order marketer of commemorative coins. At the time, Home Shopping Network was the established market leader.

But QVC quickly grew through a series of acquisitions of shopping channels.

It got bigger under the leadership of Fox Broadcasting founder Barry Diller, who expanded overseas. Diller had stunned many in Hollywood when he emerged as chairman of QVC in 1993 after quitting Fox.

Comcast Chief Executive Brian Roberts made a surprise bid for QVC in 1994, torpedoing Diller’s efforts at the time to merge QVC with CBS Inc. Roberts was joined by Liberty Media, headed by cable magnate John Malone. They gained control of QVC for $1.42 billion.

Last year, QVC earned $858 million before interest, taxes, depreciation and amortization, or EBITDA, on sales of $4.6 billion.

Malone’s $7.9-billion purchase price for the 57.5% stake in QVC gives the entire property a value of $13.8 billion. By comparison, Federated Department Stores Inc., which owns Macy’s and Bloomingdale’s, has nearly four times QVC’s annual sales. But its market value is only $6.7 billion.

QVC introduces 250 products each week to 85 million homes in America.

Bob Bowersox has been one of the channel’s sales hosts for 17 years, since the very first show. He has seen not only a lot of new products but also a lot of bosses.

“We’ve been owned by the public. We’ve been owned by Barry Diller, Comcast and now Liberty Media. I don’t think it makes any difference who owns us,” Bowersox said.

“The thing I do on the air isn’t going to change.”