QVC is a 24 hour a day shopping channel available via cable, owned by Liberty Media. The letters QVC stand for "Quality, value, and convenience."
The corpses of eToys and Webvan have long been picked clean, and Amazon.com is struggling to turn a profit. But for 16 years, QVC has quietly been doing exactly what online retailers so loudly claimed they could do: use a cheap electronic medium to reach millions of customers, sell goods without stores, make interactive shopping fun, deploy sophisticated technology to save on inventory and shipping—and make money hand over fist.
--Daniel Gross, "T-Commerce Beats E-Commerce," Slate, 8 July 2003.
QVC began when Joseph Segel, the entrepreneur who created the Franklin Mint company,
watched a few minutes of the new Home Shopping Network in 1985. He disliked HSN's hard sell and last minute discounts. Segel believed a shopping channel with knowledgeable, friendly presenters who knew the product background and history, would be more attractive to a television audience, and sell better.
In 1986, with $28 million in investors' money, he started, lining up 58 cable systems in 20 states by offering them stock in the company for as little as twenty cents a share. (He was competing nationally with as many as 17 other televison based direct marketing channels). To lend credibility to the new company, he got Sears to commit to an exclusive two year contract. Revenue for the first fiscal year was $112 milllion. (A record for a new public company, and not bad considering it was only reaching 10% of all homes wired for cable at the time).
In 1989, QVC bought out its biggest competitor, Cable Value Network. The purchase was described as a python swallowing an elephant, as CVN reached twice as many homes as QVC.
In 1993, Segel retired, and Barry Diller, the wunderkind from Paramount and Fox, became CEO (he owned 12% of the company himself). By this time, QVC was reaching 80% of American homes. Expansions into the UK, Japan, and Germany began. At the same time, Diller saw QVC's cash as a war chest to create a media empire (QVC always had good sales with product tie-ins to movies, television shows, and music. Diller wanted QVC to own a stable of entertainment properties outright). First, he attempted to buy Paramount (first with a friendly offer, then a hostile one), but failed in a bidding war with Viacom. Then he turned his sights on the CBS television network.
Even as late night comedian David Letterman mocked the idea, Wall Street got excited with the prospect of a QVC-CBS merger. However, Comcast, one of the original cable company investors, and by now a significant owner of QVC (11%), looked at it differently: its investment in the company would be significantly diluted with a merger. Comcast, under the leadership of Ralph Roberts, presented a surprise offer to Diller: $2.2 billion to buy QVC. CBS walked away from the table, refusing to get into a bidding war, and Diller couldn't refuse (since the deal was clearly better for QVC shareholders). Comcast and another cable company, TCI Liberty Media, purchased what they didn't own, and sent Diller packing (he would go on to acquire the Home Shopping Network). Thus, in 1995, QVC was privately owned by two publicly owned companies.
After paying off its debt to acquire QVC, Liberty Media announced in 2003 it was exercising its right to determine the fair market value of QVC, in order to potentially offer it for sale. Comcast, the majority owner at 57%, had relied on QVC for cash (it made up one third of its 2002 revenue), but, saddled with debt from its acquisition of AT&T Broadband, agreed to sell its stake to... Liberty Media, for $7.9 billion in cash and stock.
QVC had annual sales in 1999 of USD$2.8 billion, in 2000 USD$3.5 billion, in 2001 USD$3.9 billion, and in 2002 USD$4.4 billion.
As of June 2003, QVC reaches 96% of the US cable market, or 85 million homes. Currently, QVC's US-based call centers take in 120 million calls a year. The channel attracts 40,000 new customers a week, and 44% of them will come back and buy something else.
In 2005, Broadcast & Cable noted that in terms of revenue, QVC was the second largest television network (falling behind number one ranked CBS).
Sources:
QVC.com.
Liberty Media Corporation Annual Report April 2003.
"Hall of Fame 2000 Members: Ralph J. Roberts." The Cable Center. <http://www.cablecenter.org/history/hall_of_fame/hof_member.cfm?year=2000&ID=13> (29 December 2003)
Daniel Gross, "T-Commerce Beats E-Commerce," Slate, 8 July 2003. <http://slate.msn.com/id/2085320/> (29 December 2003)
Thomas Haire, "Malone finalized QVC buyout, repositions himself as cable power-- again," Response TV. September 2003. <http://www.findarticles.com/cf_dls/m0EJO/12_11/108496064/p1/article.jhtml> (29 December 2003)
Tom Kerver, "QVC Comcast's Hidden Treasure." Cablevision. 8 May 2000. <
Akweli Parker and Patricia Horn. "Comcast-Liberty Deal is Good News for Both." Philadelphia Inquirer. 6 July 2003. <http://www.philly.com/mld/inquirer/2003/07/06/business/6239967.htm> (29 December 2003).
Budd Margolis, "Home Shopping History: HSN & QVC," Budd Margolis Personal Site. <http://ourworld.compuserve.com/homepages/budd_margolis/hsHistry.htm> (29 December 2003
Martin Peers. "How Media Giants are Reassembling the Old Oligopoly." Wall Street Journal. 15 September 2003. Reprinted at <http://www.reclaimdemocracy.org/weekly_2003/media_oligopoly.html> (29 December 2003)
Rama Ramaswami. "Out of Service." Operations and Fullfillment. 1 January 2003. <http://opsandfulfillment.com/ar/fulfillment_service_2/> (29 December 2003)
Adam Steinhauer and Anthony Effinger. "The Web Starring Barry Diller." Bloomberg Markets. December 2003.