ValueVision Media

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ValueVision Media (NASDAQ: VVTV) is a direct-to-consumer retailer with a television home shopping and Internet business. The company's television network is called ShopNBC and is available in millions of homes in the United States. The company also broadcasts the ShopNBC network directly on the Internet at www.ShopNBC.tv, and it sells products at www.ShopNBC.com.

ValueVision Media is headquartered in Eden Prairie, Minnesota. Customer service is in Brooklyn Center, Minnesota as well as Spokane, Washington and Omaha, Nebraska. Fulfillment operations are in Bowling Green, Kentucky. In addition to selling directly to consumers through ShopNBC, the company provides customer service and fulfillment services to polo.com.

The Company was founded in 1990 by Robert Johander and several others[1]. ValueVision got its big growth spurt under the leadership of Gene McCaffery, who was CEO from 1998 to 2003[2]. Known as "the General," McCaffery is credited with persuading General Electric to take a large ownership stake in the Company. Under McCaffery, ValueVision also changed the name of the network from "ValueVision" to "ShopNBC." With NBC's help the network grew from 14 million homes to 58 million homes[3]. McCaffery retired from ValueVision in 2003[4].

ValueVision CEO William Lansing guided the Company from 2004 to 2007, focusing on Internet growth. Although the Company continued to struggle with high distribution cost overheads, Lansing is credited with swinging the Company from large EBITDA losses in 2004 to large EBITDA profits in 2006[5].

ValueVision CEO Rene Aiu took over in early 2008. The company has trailed QVC and HSN home shopping networks and continues to have much higher distribution costs as a percentage of revenue than its two larger competitors. Aiu has made reducing distribution costs a priority[6]. According to Stifel Nicolaus, ValueVision distribution costs account for 16% of revenue, compared to less than 8% for competitors[7]. ValueVision suffers from a costly DIRECTV contract which expires in 2012. About 65% of ValueVision's cable network contracts expire in 2008, leaving uncertainty about ShopNBC's future. Some analysts think that a reduction in carriage fees may be possible, helping the Company[8]. Other analysts think that the Company may lose distribution or face higher costs.

The stock has fallen from a peak valuation of over $2 billion to less than $200 million in 2008. According to the 8-K filed with the SEC on 11/23/04, GE owns about 5 million preferred shares which have a preference of $8.29 per share[9], so it is not affected by additional share price declines. Common stock holders have asked ShopNBC to use its $85 million in cash to buy back stock and activist 13D shareholders have clamored for years for a stock buyback, but ValueVision may be precluded from large tenders by the contract with DIRECTV, which in essence makes a claim on the Company's cash through 2012.

[edit] References

  1. ^ SEC Info - Johander Robert L - SC 13G - Valuevision Media Inc - On 2/14/97
  2. ^ SEC Info - Valuevision Media Inc - 8-K - For 12/1/03 - EX-99
  3. ^ VALUEVISION MEDIA INC - VVTV Proxy Statement (definitive) (DEF 14A) CERTAIN TRANSACTIONS
  4. ^ Open link
  5. ^ Open link
  6. ^ ValueVision Media F4Q07 (Qtr End 2/2/08) Earnings Call Transcript - Seeking Alpha
  7. ^ ValueVision Media initiated with "hold" - newratings.com
  8. ^ ValueVision Media initiated with "hold" - newratings.com
  9. ^ SEC Info - Valuevision Media Inc - 8-K - For 11/18/04