ShopNBC Calls Off Auction1/27/2009 11:26 AM Eastern
About four months after revealing that it was searching for a buyer troubled shopping network ShopNBC said that it had received no final bids and has reshuffled management.
ShopNBC, like other retailers, has been hit hard by the recession, with third-quarter sales declining 32%.
The fourth quarter doesn't appear to look any better. ShopNBC released preliminary fourth-quarter results Tuesday, stating that revenue for the period is expected to be about $142 million, a 35% decrease compared to the same period in 2007. The company also expects to report a cash flow deficit of $15 million in the period, compared to positive cash flow of $5 million in the prior year. The estimated net loss for the quarter is expected to be about $40 million, compared to a $1 million net loss during the same period in 2007.
The company added that it also considered a liquidation, but determined that such an action would not likely result in any distribution to shareholders. As a result, the company said that it would continue to operate and look for ways to bolster revenue and cash flow.
"Over the last few months, we thoroughly explored a wide range of strategic alternatives and held extensive discussions with a number of interested parties," said George Vandeman, chairman of the special committee and member of ShopNBC's board of directors. "While we hoped to find a viable transaction through these discussions, no final bids were received. As a result, the special committee concluded and recommended to the board that the best option at this time is to continue to operate the company as an independent entity."
In the statement ShopNBC said that Piper Jaffray had contacted a total of 137 separate parties since Sept. 10 and received initial interest from 13 of them. That list was them paired to four who were invited to a second round of bidding. ShopNBC did not reveal who the parties were, but said in the statement that two were strategic players and two were financial sponsors.
But outside issues - including its ongoing carriage negotiations with distributors and it's the uncertainty surrounding the possible redemption of General Electric Co.'s preferred interest in the shopping channel - ultimately stalled the process.
ShopNBC also made some management changes, promoting president and chief operating officer Keith Stewart to CEO, replacing John Buck, who is voluntarily stepping down. Buck will remain chairman of the board.
Stewart joined ShopNBC in 2008 after serving 15 years in various roles with No., 1 shopping channel, QVC.
In addition, ShopNBC also added Randy Ronning, a 30-year veteran of the retailing industry, to its board of directors. Ronning had most recently served as executive vice president and chief merchandising officer at QVC.
The Eden Prairie, Minn.-based retailer said entered into consulting agreement with another former QVC executive - former president of U.S. commerce for the channel Darlene Daggett. Daggett will assist the company in all areas of strategic planning and implementation and will also serve as a strategic adviser to the CEO.