TV Shopping Networks Considering a Merger

Raising the possibility that two large shop-at-home TV networks may be one too many in today’s troubled retail climate, Home Shopping Network said Thursday that it is holding “exploratory” talks regarding a possible business combination with archrival QVC Network.

Although neither company would elaborate on the announcement, analysts said rumors of a merger have been flying in recent days. The two networks dominate the $2-billion-a-year televised shop-at-home market.

After debuting in the mid-1980s to rave reviews and soaring sales, televised shopping hit the skids by the end of the decade, a victim of its own success and hype. Even Home Shopping Network and QVC, the two survivors with national TV audiences, have been struggling to find their stride and maintain that momentum.

“A merger would make sense,” said Sharon Armbrust, an analyst with Paul Kagan Associates, a telecommunications and broadcast media research firm in Carmel.

West Chester, Pa.-based QVC Network, whose cable TV shows are available in 42 million homes nationwide, is the financially strongest of the two, analysts said.

At QVC--the initials stand for quality, value and convenience--revenue for the year ended Jan. 31 totaled $922 million. It is expected to report a profit when it releases its annual earnings.

Clearwater, Fla.-based Home Shopping Network, the industry pioneer which reaches about 65 million U.S. households., reported higher annual sales, $1.1 billion for the year ended Aug. 31, 1991, but it lost of $8.9 million.

John Reddan, analyst with Moran & Associates, a brokerage in Greenwich, Conn., said merging the nets would allow the surviving entity to offer many more specialized video shopping programs.

Noting that the 15-year retail trend is away from general-merchandise stores toward specialty stores, Reddan said there is no reason why a shopping net could not offer the equivalent of a “video mall.”

“The goal is to increase your retail formats to offer merchandise that appeals directly to people quickly rather than offering a variety of wares with a more general appeal,” Reddan said.

Both QVC and Home Shopping Network declined to comment on the speculation. A brief statement from Home Shopping Network said only that no agreement or understanding has been reached. That came after the close of stock trading Thursday. Home Shopping Network shares dropped 12.5 cents to close at $8 on the New York Stock Exchange, while QVC rose 50 cents to close at $19.50 in over-the-counter trading.