HSN to sell off German TV shopping network
The deal ends an 11-year foray into European markets.
By Mark Albright, Times Staff Writer
Published May 10, 2007
HSN's owners are saying auf wiedersehen to the German-language version of the TV shopping network that emanates from Munich, completing their retreat from the European market.
Barry Diller's IAC/InterActiveCorp which owns St. Petersburg-based HSN Inc., said Wednesday it agreed to sell its interest in Home Shopping Europe.
The network, which airs as HSE24 in 39-million homes in Germany, Switzerland and Austria, will be acquired by KarstadtQuelle AG, a German department store chain, mail order house and the operator of Thomas Cook and Neckerman Travel.
The price for the TV shopping network, which had revenues of $388-million in 2006, is stock in KarstadtQuelle valued at $196-million. While IAC will end up with a minority stake in Karstadt for an unspecified time, KarstadtQuelle will put up $75-million in cash should the market value of the proffered shares drop below $270-million within three years. The deal is expected to close by fall.
"The sale allows us to strengthen the focus on our core domestic retail market and our commitment to redeploy capital into strategic growth areas, " said Doug Lebda, president and chief operating officer of IAC. IAC also recently pulled the plug on America's Store, HSN's domestic sibling.
The deal ends HSN's 11-year foray to crack the European market. The network blew $175-million on an ill-fated venture in Italy several years ago and never could gain traction in the Netherlands.
It recently gave up on TV auction and packaged-travel channels in Britain. The sale leaves HSN International with minority stakes in TV channels in China and Japan.
While the German venture has been a hot and cold performer, it was by far HSN's strongest European franchise until previous German broadcasting partners went bankrupt a few years ago.
"It seemed like a marriage made in heaven, but it never quite lived up to what was hoped for, " said Budd Margolis, a London-based TV shopping consultant. "Barry Diller must be wondering, "What went wrong?' "
Diller several times had to explain to analysts how logistical blunders plagued the German network's performance and undermined customer loyalty.
Meantime, HSN's bigger TV shopping rival, QVC, has been able to build a $1-billion-a-year business in Germany.
HSE management and 460 people who work for them will become KarstadtQuelle employees. The network, which will own the rights to the name HSE, will become an extension of the Primondo mail order brand that generated about $6-billion in sales in 2006.
Mark Albright can be reached at email@example.com or (727) 893-8252.