• by Thom Forbes  @tforbes, July 7, 2017

QVC parent Liberty Interactive is acquiring the 68% of HSN it does not already own to create the third-largest e-commerce company in North America after Amazon and Walmart. They will, however, remain separate brands producing a total of more than 55,000 hours of shoppable video content a year.

The deal includes HSN’s Cornerstone division, which markets home and apparel lifestyle brands including Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements. QVC owns the flash sales site Zulily.

CNN Money put together a short reel of amusing home-shopping bloopers carrying the caption: “For just 105 million easy payments of $19.99 — or $2.1 billion — the Home Shopping Network will soon belong to QVC's corporate owner.”

Actually, writes Bloomberg “Gadfly” columnist Tara Lachapelle, the all-stock deal valued at that price amounts to “one easy payment! That's almost 20% off last year's retail price! (Fine print: It's not in great condition.)”

Indeed, as their audience ages, technology is on the move.

“QVC and HSN both found loyal followings among early cable television viewers in the 1980s but have more recently faced challenges adapting to the online age. Increasingly, they must appeal to cord-cutters who have given up their cable television subscriptions in favor of watching videos on tablets, computers and smartphones,” points out Sintia Radu in the Washington Post.

“With e-commerce ascendant, nearly everyone else in retailing, from venerable department stores to once-trendy clothiers like J. Crew, has been struggling to grow or even survive…,” Chad Bray and Michael de la Merced remind us in the New York Times. “With their familiar pitches for impulse purchases of electronics, jewelry, makeup and fitness equipment, both QVC and HSN are grappling with ways forward.”

“Overall, the merger makes sense — and even more so now than in 1993, when the companies first discussed joining forces…,” Bloomberg’s Lachapelle writes. “Back then, the U.S. Federal Communications Commission had just ruled TV-shopping stations could demand that cable systems carry their programs. Both stocks were strong, and there were concerns that combining QVC and HSN would have been anti-competitive. Today, they're teaming up just to try to stay relevant.”

Liberty Interactive Corp. is based in Englewood, Colo.; QVC’s headquarters are in St, Petersburg, Fla., where they will remain.

“Liberty Interactive is chaired by John Malone, who also is the largest shareholder in Charter Communications, which last year closed its $55 billion acquisition of Time Warner Cable. Another media mogul, Barry Diller, served as CEO at QVC for about three years, when it was owned by Liberty and Comcast, before leaving in 1995. He then acquired HSN, which he grew into IAC/InterActive Corp. Malone's Liberty eventually got Diller's HSN stake in another all-stock deal,” reports Mike Snider for USA Today.

“The future of HSNi's Cornerstone Brands … is uncertain. Executives on an investors' call hinted at a possible sale in the near future,” write Justine Griffin and Malena Carollo for the Tampa Bay Times. But Mike George, president and CEO of QVC, tells them in an interview that Cornerstone is “an important part of the portfolio.”

Together, the companies will have $14 billion in revenue and 23 million customers around the world, according to George. “For folks just starting out with an entrepreneurial idea to have access to this combined HSN-QVC platform, the opportunities are extraordinary,” he told CNBC’s “Squawk on the Street,” David Gernon reports.

But some analysts believe that the combined entity is more like a loaded barge floating against tide.

“The consumers who buy on TV aren't the ones who buy online,” Britt Beemer, chairman and CEO of America's Research Group, tells Griffin and Corollo. “The youngest consumers don't know who they are at all, so their interest has been minimal. They're going to have to develop a whole new strategy to reach them if they want to expand their online discovery base.” 

Indeed, “revenue at Liberty Interactive and smaller HSN have effectively flatlined for the past three years, and their profit fell by 26% and 30%, respectively, last year. Home shopping’s share of the overall U.S. retail market has fallen a quarter since 2011, according to data from Euromonitor,” Reuters’ Lauren Silva Laughlin writes. 

Mindy Grossman, who had led HSN since 2008, left the company in April to become president and CEO of Weight Watchers International. HSN “has been operating without a traditional executive structure” since then, Variety’s Brian Steinberg points out, with three executives divvying up the duties.

QVC’s George will now oversee the whole shebang. He maintains “the combined company will be well-positioned to help shape the next generation of retailing.” 

If it is to survive, it will have to do better than the two entities have with the currently ascendant one.