Discount home shopping

The teleshopping business has entered a new era that portends explosive growth in sales as the industry's two major TV merchants-QVC Network and the Home Shopping Network--have become associated with traditional retailers, major fashion designers and even a megamall. [TABULAR DATA OMITTED]

The teleretailing industry's growth could come at the expense of traditional stores and result in cable TV systems becoming important marketers and distributors of merchandise. This would fit in with the cable TV industry's drive to position itself as the nation's leading electronic communications and information provider.

One cable TV powerhouse, Liberty Media Corp., became the dominant shareholder in the two telesellers when it completed a tender offer for a block of HSN stock. The offer boosted Liberty's ownership to 41.5% of HSN's outstanding shares and to 71% of the votes. Liberty already directly owns the greatest amount of QVC common and preferred stock. At QVC, Liberty has also formed a shareholder voting group with Comcast Corp., another cable company, and Barry Diller, QVC's chairman and ceo, that effectively controls the teleshopper.

Liberty is a spin-off of Tele-Communications Inc., the nation's largest cable company. Executives from a number of cable TV systems are on the QVC and HSN boards.

QVC's programs reach about 44 million cable households, while HSN's go to about 27.4 million cable homes and about 27.5 million broadcast TV households. Both teleshoppers are also received by the 3.1 million satellite TV households.

Currently, the only other teleshopper is Value Vision International, which reaches about 6.6 million cable TV households, 3.1 million satellite TV homes and an undetermined number of households that receive Low Power [broadcast] TV stations. Value Vision purchases blocks of cable and broadcast TV time on a month-to-month basis to air programming. Sales in 1992 reached $14.5 million, up from $323,070 in 1991, its startup year. Its operating loss fell to $1.7 million from $1.8 million.

The nature of the teleshopping business and the number of players will be changed by the associations that QVC and HSN have formed recently. The changes can be traced back to one event, Barry Diller buying a $25 million stake in QVC at the end of 1992 and becoming its top executive in January. A major Hollywood figure, he had previously headed Paramount Pictures and then helped launch and lead the Fox TV network. His joining QVC transformed the teleshopping industry's image from a marketer of cubic zirconium to main street retailing, attracting the attention of department stores and fashion designers.

The fallout includes:

* Saks Fifth Ave. sold private label goods in two one-hour shows on QVC, with more programming planned;

* Designer Liz Claiborne tested a show on QVC, joining colleagues Diane Von Furstenberg and Arnold Scaasi, who have sold goods on the channel;

* Macy's has decided to launch a teleselling channel in partnership with one current and one former CBS-TV executive, and will use HSN for customer ordering, warehousing and shipping;

* The NBC TV network probed TV retailing in a "Mall of America" show taped at that shopping center and featured goods from a number of stores there;

* Nordstrom and Bloomingdale's are considering teleshopping shows.

The question is, "Who's next?"

QVC, which is now driving the business founded by HSN a decade ago, isn't limiting its reach to the United States. It has formed ventures for foreign shows. Grupo Televisa is its partner for a Spanish language service in Spain, Mexico and Latin America, and in Portuguese in Portugal and Brazil. British Sky Broadcasting, a satellite service, is the partner for a channel serving the United Kingdom, Ireland and a major part of Europe.

The long envisioned marriage between cable TV and personal computers could also be in QVC's future. The teleshopper has been discussing a PC version that would be offered through the Prodigy online computer service.