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'A little more flair and salsa'
By MARK ALBRIGHT, Times Staff Writer ST. PETERSBURG -- Gerardo Acuno was on his knees touting the inner workings of a Dirt Devil electric sweeper when fellow show host Evelyn Betancourt interrupted the sales pitch.
Such directness would hardly fit the saccharine repartee U.S. viewers expect from Home Shopping Network. But the network's Hispanic cousin aims for what its producers call "a little more flair and salsa." Such cultural nuances have become a big deal at HSN as the nation's oldest TV shopping network tries to be discovered by the rest of the world. After years of airing dubbed infomercials in a few countries, HSN has spent $175-million over the past few years setting up shop in Europe, Latin America and Asia. Separate live broadcasts in Spanish for the U.S. Hispanic market and Mexico are beamed from the network's headquarters in St. Petersburg. Live broadcasts in six other languages originate in studios from Munich to Shanghai. * * * With its nonstop sales pitches reaching 13 countries including the United States, HSN claims to be wired into more cable households worldwide (183.9-million) than any network except CNN (257-million). Yet while much of HSN's sales growth of the past few years came from new overseas markets, the ventures remain a mixed bag. International sales rose 15 percent, to $319-million, in 2001 over the previous year, but revenues fell far short of what the network brass had hoped. And profits remain elusive: HSN International reported an operating loss of $34-million in 2001. Perhaps the biggest surprise is the products sold. No matter how different the look and language of each international version of HSN, about 90 percent of the best-selling products are the same as in the United States -- cookware, collectible dolls, fitness equipment, cosmetics and jewelry. "We've learned that people in other countries watch for the same reasons they do in the states," said Mark Bozek, president and chief executive of HSN. "They like to dress up in nice clothes, buy good-looking jewelry and cook at home. We're selling moderately-priced goods that represent good value." * * * The growth of the middle class, the spread of global brands and the development of commercial TV in Europe and Asia made Barry Diller, the Hollywood mogul who controls HSN parent USA Networks Inc., keen to export live TV shopping. He envisioned a $1-billion business for HSN by now. HSN is only halfway there, even including $181-million in revenues from overseas TV shopping ventures that HSN doesn't report because it owns only a minority stake. It wasn't the first time Diller looked overseas. He established the first foreign beachhead for QVC Inc. in the United Kingdom when he was chief executive of that network in 1993. In 2001, QVC generated $484.2-million in sales from its networks in the UK, Germany and Japan. At HSN, Diller envisions leaving QVC in the dust. He put HSN into twice as many countries as QVC. And he expects profitability within two or three years. The frenetic pace of meeting Diller's ambitious schedule took a toll. The two jet-lagged executives who did most of the marathon globe-trotting to set up HSN on three continents simultaneously resigned last year. In Italy, HSN has been on the air a year while it appeals the Italian government's denial of a broadcast license for the venture. In Puerto Rico, HSN is in court with its former broadcast partner after the TV shopping venture's inaugural year failed to draw a big enough audience. In Germany, HSN is close to breaking even on sales of $247-million in 2001 but has yet to deliver a consistent, stable business. Last week, one of HSN's biggest partners in Europe, Kirch Group, Germany's second largest broadcaster, declared its biggest operating unit, KirchMedia, insolvent. "We're still in business in Europe and intend to stay fully involved," Bozek said. "In light of recent events, we are discussing options ranging from finding other partners to proceeding on our own." * * * TV shopping is hardly new in many of the countries where foreign-language versions of HSN are aired. But much of the competition is taped infomercials or amateurish efforts, such as the more than 500 local TV shopping shows in Italy. Meanwhile, European broadcasters are suffering a recession that dramatically decreased advertising. So the welcome mat is out for TV shopping channels that offer broadcasters and cable operators a new revenue source. In England, HSN debuted in a crowd of 10 new shopping channels in 2001.
With so many new faces hawking wares on European TV, building trust with customers takes time. "Home shopping is new in many countries so we have to program the basics more often -- giving the phone number to call and instructions for ordering six to 10 times an hour," said Malta Hildebrandt, senior vice president of marketing for Home Shopping Europe in Munich. The network had to do a lot of apologizing last Christmas. The German network switched to a new ordering system before it was ready for prime time. The disastrous result: Deliveries promised in three to five days arrived in 10 to 15 days -- unless upset customers canceled their order. * * * As usual, the strong-willed Diller knew exactly what he wanted for HSN International: each cable channel live and in the local language. He also wanted partnerships with European, Latin or Asian media companies so HSN is not seen as some invading foreign force. About 10 percent of the products are local. In Mexico, customers see hand-painted Tala Vera cookware and Sacualpa housewares that are common in Central American kitchens. In Germany, popular actors Uschi Glas and Kristina Kaufman push their cosmetic lines. On the Spanish-language HSN in the United States, producers carry products from Hispanic countries that are hard to find here. "We have a good shot at becoming the Pier One Imports for Hispanics," said Roberto Madrazo, vice president and general manager of Home Shopping Espanol. The sets are decorated with familiar touches from homes found in the region. "We're not like McDonald's or Coke selling their own products in a foreign country," Bozek said. "These are very much German or Japanese TV shopping channels. We go out of our way to respect the country and not seem like arrogant Americans. Watching these channels, you wouldn't even know HSN is an American network. One way to do that is by using a generic broadcast-speak that's not linked to any particular nationality. That means show hosts steer clear of colloquialisms and idiomatic language. "We want proper Spanish similar to Tom Brokaw's English," said Ysmael Delasantos, a production manager for Home Shopping Espanol. "We've had to tone down many show host accents." The German broadcast aired from Munich also draws customers in Austria and Switzerland. The French broadcast that emanates from Brussels airs in Belgium, Luxembourg and France. The Chinese version is heard in 28.9-million homes clustered in population centers such as Shanghai, Hong Kong and Peking. "The potential in China -- 300-million TV homes and 130-million cable homes -- is enormous," Bozek said. In comparison, there are 105-million TV homes and 89-million cable homes in the United States. Playing in so many regions, however, is a minefield of diverse audiences. The Hispanic market in the United States may be 70 percent Mexican, but it's far from monolithic. When a Home Shopping Espanol producer asked his staff for the Spanish word for "floor mop," he got five answers.
To better target cultural distinctions, the network sends separate customized feeds to Mexico and the U.S. Hispanic market. One time-tested HSN technique that the network wants to export is the spontaneous patter of its show hosts. But that didn't go down well in formal Japan. Show hosts, fearful that a slip of the tongue would undermine sales of the network's top-selling "daily special," persisted in pretaping a scripted spiel. Bozek had to persuade them personally to give that up. "You could tell it was taped because the announcer all of a sudden was wearing a different outfit," Bozek said. Each channel tries to fit into the national psyche. In Mexico, show hosts spread gossip about soap opera stars. Food shows feature non-meat dishes during Lent. To capitalize on Mexican TV's obsession with novellas, the network ran its own corny 10-episode soap opera called I Will Always Buy to sell such items as cordless phones. "Like a real novella it was filled with bitchiness, drama and intrigue," said Guillermo Nicolas, director of on-air talent for the Spanish language HSN. "Latins like to be entertained while they shop," Betancourt said. -- Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
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