Scripps Tweaks Its Shopping Network1/04/2004 7:00 PM Eastern
E.W. Scripps Co. is already making changes to its Shop At Home network, streamlining operations a little more than one week after purchasing the remaining interest in the home shopping channel.
Late last month, Shop At Home created a new planning division, headed by senior vice president of planning R. Steven Chadwell, and consolidated its finance and treasury departments under the leadership of Dawn Woods.
In a statement, Shop At Home said the restructuring was an effort to streamline operations while more closely monitoring merchandising needs.
The planning division will be responsible for determining product category mix, allocating product airtime, merchandise forecasting, customer financing, monitoring the development of new product categories and inventory management, as well as analyzing results to evaluate effectiveness.
As senior vice president of finance and treasurer, Woods will have responsibility for all collections and disbursements, budgeting, forecasting and analysis, financial statement preparation, general ledger accounting, fraud prevention and internal controls.
"Steve and Dawn hold a tremendous amount of valuable forecasting and analysis experience, and we look forward to their continued contributions to our network," said Shop At Home president Frank Woods in a statement. "Their combined talents will help drive bottom-line results, while attracting new customers and products as we continue to grow within our industry."
Those moves come a little more than one week after Scripps agreed to purchase Summit America Television Inc., which includes the 30% of Shop At Home that Scripps doesn't already own, as well as five broadcast television stations affiliated with the shopping network, for about $184 million in cash.
Scripps had acquired 70% of Shop At Home from Summit America in October 2002 for about $49.5 million.
As part of this deal, Scripps said it would forgive a $47.5 million loan to Summit as part of the earlier transaction, and would forego the redemption of $3 million in Summit preferred stock that Scripps holds. That pushed the value of the deal up to about $235 million. Scripps said that its total investment in Shop At Home is about $285 million.
Scripps said it will pay about $4.05 per share for Summit, a 19.8% premium over its closing price of $3.38 per share on Dec. 18.
The five broadcast stations — KCNS, San Francisco; WMFP, Boston; WOAC, Cleveland; WSAH, Bridgeport, Conn.; and WRAY, Raleigh-Durham, N.C. — are in lucrative markets, which added to the value of the deal, Scripps CEO Ken Lowe said in a conference call with analysts Dec. 19.
"On a revenue-per-households basis, these are some of Shop At Home's most productive households," Lowe said. "We're bringing these subs in now because it is the smart thing to do."
The five stations are dedicated solely to Shop At Home programming, he added, and reach about 5.3 million cable households. Shop At Home currently is available in about 45 million homes.
Scripps, which also owns the Home & Garden Television, Food Network, Do It Yourself Network and Fine Living cable channels, said it expects to close the Summit deal in June.
Scripps has made some major strides with Shop At Home, which had struggled for years against its much stronger competitors, QVC Inc. and ShopNBC.
Third-quarter revenue at Shop At Home was up 10% and losses were slightly better than expected at $3.8 million (4 cents per share). Scripps expects losses at Shop At Home to be about $20 million in 2003.
When Scripps took control of the network in 2002, it immediately scrapped the collectibles focus of the channel and Web site, focusing more on lifestyle products like home furnishings, cookware, food and home-and-garden related products. It also began to conduct live broadcasts from events, the first being a furniture trade show in Highpoint. N.C., last year and hosted by on-air personalities from other Scripps networks.
HISPANIC NET UPDATE
In addition to tying Shop At Home to its existing networks, Scripps CEO Ken Lowe said that a planned Hispanic network is still in the testing stage, and declined to reveal a launch date. But later, Lowe left the door open to providing programming exclusively to certain distributors.
"Looking into the future, you might consider exclusive deals, but it would probably be more difficult with the MSOs," Lowe said at the Credit Suisse First Boston Media and Telecom conference in New York Dec. 10. "With DirecTV [Inc.] or EchoStar [Communications Corp.], once it goes up it's available across the U.S. That's the reason for Fine Living, we did the DirecTV deal right out of the box — we wanted Fine Living available nationwide as opposed to market by market.
"Looking forward, if you were doing a network that was so narrowly targeted to upper income households, second households and vacation homes, you might look at an exclusive deal with a satellite distribution partner. For us, I doubt you will see that, but I guess never say never."