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Cashing in on the home shopping boom
Black Enterprise, Feb, 1995 by Cassandra Hayes
Growth has been phenomenal since going public in 1986. The 1993 revenues of the home shopping pioneer were more than $1.04 billion. For the nine-month period ending September 1994, net sales grew to $824.8 million, a 10% increase over sales for the previous year.
HSN's St. Petersburg headquaters now stretch acroos 55 acres, venerably nicknamed "the campus." In 1993, the company shipped over 21 million packages from here and three other warehouses located in Waterloo, Iowa, Reno, Nev., and Salem, Va. The Network now has three channels: HSN 1; HSN 2, which is similar to HSN 1 but is broadcast from a dozen UHF broadcast stations; and HSN Spree. Their audience is enormous: More than 60 million households in the United States are reached by HSN. Meanwhile, a state-of-the-art voice answering system named "Tootie" answers the roughly 158,000 calls received daily. First-time callers and Home Shopping Club members with specific questions can also speak to one of the 2,000 human operators.
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In a joint venture last September, HSN and Black Entertainment Television began a 13-week test run of B.E.T Shop. The show has done so well that it's been extended another 13 weeks. Co-hosted by Mason and another African-American HSN host, Tina Berry, the two-hour program, broadcast from HSN's Florida headquaters, offers jewelry, clothing and cosmetics aimed at the black consumer. BET also plans to creat a new distribution outlet for African-American manufacturers interested in marketing their products.
HSN has even opened its corporate doors to outside entrepreneurs, such as John E. Oxendine. In 1988, Oxendine, chairman and president of Blackstar Communications Inc., bought the first of three broadcast stations affiliated with HSN. He says that his venture with HSN makes good business sense; it worked because HSN, like African-Americans in the field, is in the minority.
"They were outsiders," notes Oxendine. "They were entering the broadcast arena to show programming that was not the typical fare. They could identify with those of us who have traditionally been out there."
Oxendine's three stations, in Portland, Ore., Ann Arbor, Mich., and Orlando, Fla., came with a price tag of $14.3 million, and have more than doubled in value. Currently, Oxendine is trying to raise $215 million for the initial acquisition of 11 television stations to be affiliated with Fox Broadcasting Co.
Until 1986, HSN was virtually alone in the television retailing business. Then at that point, Joseph Segel, founder of the Franklin Mint--makers of mail-order collectibles--joined the bandwagon of 17 other shopping channel contenders. Unlike the other upstarts, QVC survived, and its growth and potential sparked the interest of Barry Diller, former chairman of Fox Network Inc. Diller invested $25 million in the network in 1992, becoming its chairman and CEO.
Shipping over 38 million packages last year from distribution centers in Chesapeake, Va., and San Antonio, Texas., QVC had sales of $1.2 billion in 1993--surpassing HSN. That lead may continue as 1994 sales were projected to hit $1.4 billion. Their two channels, QVC and Q2 (which broadcasts from New York), reach 50 million American homes. QVC, the Bloomingdales to HSN's Kmart, seeks to cater to a more sophisticated customer, with high-end, targeted merchandise. Like HSN, QVC also relies on high-profile individuals, including Diane Von Furstenberg and Joan Rivers, to pitch products bearing their names.
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