Troubled home-shopping network ShopNBC has just landed the consulting advice of Alan and Marvin Segel, sons of QVC founder Joe Segel.
QVC founder and chairman emeritus Joseph M. Segel is a legend in the shop-at-home industry. In 1989, he bought a Minnesota-based competitor, Cable Value Network, which was twice QVC's size. Almost 20 years later, his two sons, Alan and Marvin, have begun working for another Minnesota-based electronic retailer, ShopNBC, that also faces long odds.
Segel Associates has spent 15 years helping clients sell their products through the direct-response television industry. Marvin Segel describes ShopNBC as “much more nimble and much more responsive” than QVC.
“They are smart. They are experienced. … Their track record is second to none,” said Keith Stewart, the ShopNBC chief operating officer and a QVC veteran. Stewart is counting on the brothers to “bring packaged concepts to ShopNBC that will be meaningful and relevant to our customers.”
Among the packaged concepts is Real Chef, a firm that provides “meal solutions” and kitchenware. The company is run by Alan Segel, who said: “The economy is in the toilet and people are eating more at home and they are watching television. It is a challenging time but in this aspect, it is a growth area. … People want this.”
Alan's products had previously been sold on QVC. “QVC has done an extraordinary job but I think ShopNBC is coming into its own,” he said.
ShopNBC's recent management stumbles have driven down its stock price. In January 2004, the stock was trading at over $19. Last week, the price hovered around $1 a share.
Stewart only recently came on board as COO following Rene Aiu's very brief stint as CEO. He describes his time at ShopNBC as “the fastest month of my life.” He has reduced clearance sales and reorganized the programming department. Stewart said return rates are down, adding, “We are now selling on value rather than price and sense of urgency alone.”
Since Stewart's arrival, the board of directors (of which he is a member) has decided to hire Minneapolis-based Piper Jaffray & Co. to look for a buyer. Despite that move, he insists he is working to position the firm for long-term growth.
“There have been a lot of very vocal shareholders who have been pressing for the company to [sell], because over the recent past they've been faced with basically burning their cash position,” said Argus Research securities analyst Wendy Walker. “There is a strong sense among the shareholder base that given the company's operational missteps over the recent past, the best way to preserve what modest shareholder value there is remaining in the company would be to either sell the company as a whole or sell off the assets.”
Among the vocal shareholders is hedge-fund manager J. Carlo Cannell, who, in a Sept. 24 letter to ShopNBC CEO John Buck wrote, “It is amazing to us how much value has been destroyed under your stewardship.”
Amidst the last month's market turmoil, ShopNBC's stock has plummeted by more than half. It is trading well below its breakup value.
Activist investors such as Cannell are impatient and angry. In the same letter mentioned above, the hedge fund manager wrote, “That you would have to hire an agent at all to advise you on what should have been done long ago is shameful.”
But Marvin Segel insisted that “for every down there is an up,” a reflection of the relentless optimism endemic to those who work in direct-response television. (His first job out of high school was selling cars.)
And has the elder Mr. Segel offered any advice?
“We have not said a word to him,” said Marvin. The brothers did not want to present their father with a potential conflict of interest in his role as chairman emeritus of QVC.
Marvin Segel added: “He is all business. He would totally respect what we are doing. … The challenge, right now, to turn something around is very exciting.”