QVC Buys Into Sports E-Commerce Firm

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Comcast Corp. and its QVC Inc. electronic-shopping subsidiary last week agreed to pay $40.8 million in cash to acquire a 19 percent stake in Global Sports Inc., an electronic-commerce company specializing in sports merchandise.

The home shopper's iQVC e-commerce division also signed a letter of intent through which Global Sports would develop and operate a new sporting-goods Web site and store for iQVC.

Under deal terms announced last week, Comcast and QVC formed a new joint-venture company, Interactive Technology Holdings LLC, which agreed to acquire 5 million common shares of Global Sports stock for $8.15 per share in cash.

Comcast and QVC also agreed to pay $562,000 in cash for warrants to purchase an additional 4.5 million shares of Global Sports common stock for prices ranging from $8.15 to $10 per share.

If the partners exercise all of the warrants, they could own a 26 percent stake in Global Sports worth $82.1 million.

Global Sports runs the e-commerce sporting goods businesses of several companies, including Kmart Corp.'s BlueLight.com, Broadband Sports, AthletesDirect, BUY.COM Inc., sportchalet.com, sportrus.com, theathletesfoot.com and thesportsauthority.com. It also runs the online stores for WebMD.com and foxsports.com.

"We think that they have an attractive e-commerce business model," said Stephen Hamlin, vice president of operations at iQVC. "We feel that they have really core competencies in the sporting goods arena, and the expertise in that arena. We feel we can take advantage of those core competencies."

Global Sports pitches its product to brick-and-mortar retailers looking to expand sales to the Internet. In most cases, the company handles the entirety of its clients' online business, including Web site development and operation, customer service and order fulfillment, spokeswoman Dana Stein Grosser said.

In exchange, Global Sports typically keeps 90 percent of the take from online sales, while the retailer keeps 10 percent of the revenue, Grosser said. "We get a lot of that upside, but we take a lot of risk."

Global Sports would not disclose its revenue arrangement with QVC, but Grosser said it is a unique deal and does not follow the company's typical 90-10 split.

The new Web site that Global Sports is designing for iQVC will be available through a link on the company's home page (www.iqvc.com), Grosser said. It will be up and running in time for the holiday shopping season, she added.

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