TYING THE KNOT, DILLER STYLE WILL QVC PLUS CBS EQUAL AN ELECTRONIC RETAILING GIANT?

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Will the Tiffany network stoop to selling costume jewelry?

That's the question raised by the planned merger of CBS and QVC, as electronic retailing pundits ponder whether the deal is more than a power play by Barry Diller to return to broadcasting.

The principals themselves aren't saying much beyond vague suggestions they'll explore ways to push QVC's cable TV selling machine through CBS' vast distribution network of affiliates.

"All of those ideas and opportunities are being explored at a very preliminary stage," said a QVC spokesman. "But as Mr. Diller said, we're not going to try to force or fudge the companies together."

Instead, observers say, QVC is likely to accelerate the pace of CBS' initial forays into interactive selling. Executives point to a program tied to the World Cup soccer tournament that appeared last month on ESPN. QVC sold nearly $250,000 of soccer-related merchandise in three 30-minute segments following ESPN's game coverage, and could do the same in shows tied to CBS.

"Certainly we don't expect `Murder, She Wrote' to start hawking cubic zirconias," said Bishop Cheen, senior analyst at Paul Kagan Associates, Carmel, Calif. "But they could be cross-promoting by blocks: If you want to see a `Murder, She Wrote' game, see a special software game program Thursday night at 9 on QVC."

Under the proposed merger, which still must be approved by both companies' boards, Mr. Diller, chairman of QVC, would become CEO of CBS, while Mr. Tisch would remain chairman of the broadcast network.

"The easy part to assume is that some CBS daypart is going to go over to home shopping," said Gary Arlen, president of Arlen Communications, Bethesda, Md. "But I think everyone was a little stung by Joan Rivers," whose syndicated "Can We Shop?" program was abruptly canceled last month due to low ratings.

The cancellation, Mr. Arlen said, suggests demand for shopping programs may still be limited to the downscale audience that home shopping channels typically attract.

CBS, meanwhile, has been active in retailing on its own.

Two years ago, the network used direct response spots to sell T-shirts and other paraphernalia tied to its "Northern Exposure" series. More recently, the network started CBS Marketing Interactive to explore projects with network advertisers and went online with Prodigy Services Co.

CBS this year also introduced Spot Plus, which sells time to infomercial marketers on its owned stations, throwing in promotional spots that encourage viewers to set their VCRs.

CBS earlier this year named Mark Harrington, the executive in charge of its Olympics coverage, to VP-new technologies, to begin exploring partnerships and start-ups.

Meanwhile, CBS Chairman-CEO Laurence Tisch is an investor in the planned TV Macy's home shopping channel.

But even QVC, one of the two leading home shopping services with $1.2 billion in revenue last year, lags in moving low-tech home shopping into the interactive age.

"QVC is well behind the developmental curve of the next generation," said R. Fulton Macdonald, president of International Business Development Corp., New York.

"It's all traditional broadcast skills. Better and more in-depth, but more of the same. I don't think interactive TV shopping is going to be made or lost by QVC or Home Shopping Network."

QVC, however, is developing "smart-agent" devices to help consumers navigate through planned interactive systems. And the company recently formed Q Direct, which designed the ESPN project.

"In the crassest terms, we stood outside a soccer stadium and sold soccer stuff to people as they left the game," said Robert Perkins, Q Direct's president. "I think there's a real opportunity for lots of networks, where they've developed specialized audiences that will find short 30-minute programs very relevant to their needs."

Joe Mandese contributed to this story.

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