Can merger bring strength in scale?
Why it matters: 2018 could be a make-or-break year for TV shopping titan HSN, which experienced an executive exodus following the announcement of the St. Petersburg-based company's $2.1 billion merger with rival QVC.
In a retail landscape dominated by Amazon, is there a future for HSN — which originated the concept of shopping from the comfort of one's own screen, albeit the screens were TVs, not tablets and smartphones, way back in 1982?
Taking on Jeff Bezos' behemoth while fending off other rivals is a two-front fight the St. Petersburg-based company clearly isn't spoiling for. This past summer, HSN agreed to merge with Liberty Interactive Group, owner of archrival network QVC, in a $2.1 billion, all-stock deal.
The companies saw strength in combining their scale. But the merger announcement was soon followed by news that HSN's top three executives — Bill Brand, Rod Little and Judy Schmeling — planned to exit the company after the deal closed.
But QVC Group, as the company will be known, is hardly a sinking ship — or a dinosaur in the omni-channel retail sector. Racked.com, an online magazine that covers retail and shopping trends, reported in December that the merger will make QVC Group the nation's No. 3 mobile and e-commerce retailer. The top two spots on that list are held by — who else? — Amazon and Walmart, respectively.
According to the terms of the deal, HSN will continue to operate as a separate brand, making it unclear how much the network will benefit, at least in the short term, from the influx of resources afforded to it by Liberty Interactive. About a year and half before the merger, HSN laid off 2% of its workforce. The retail industry will be watching closely in 2018 to see if organizational redundancies result in additional staffing cuts at one of St. Petersburg's largest employers.
No matter the size of the payroll, there's a lot of work to do. QVC Group says combining HSN with QVC will extend its reach to more than 23 million customers worldwide, and that it's forecasting revenue of $14 billion in 2018.
Amazon's revenue in 2016 was $136 billion.