By Joseph N. DiStefano, The Philadelphia Inquirer

From its sprawling, 1,500-worker studio headquarters in Chester County, Pennsylvania, QVC and its affiliates developed home-shopping TV, packing channels for more than 30 years with live hosts and celebrities pitching clothing, kitchen goods, electronics, jewelry, and many other products to millions of viewers and filling their orders from suppliers and warehouses.

Today QVC, the West Chester-based core of Qurate Retail Inc., which includes clothing brands and small U.S., Western European and Japanese shopping channels, is struggling to cover its costs. It’s competing in a new world where it can be surprisingly cheap for energetic individuals working from home to reach millions of consumers through fast, slick product posts on TikTok (which QVC also uses) and other smartphone-based media.

Qurate’s CEO of the past two years, David L. Rawlinson II, who earlier ran industrial supplier W.W. Grainger and then consumer analytics giant NielsenIQ, notes that the company has faced and beaten earlier tech-based competition, including when Amazon tried to start its own home-shopping programs.

Rawlinson, a South Carolina native, Harvard grad, and longtime Chicago resident now living in Wayne, says he’s confident Qurate will survive because it has its “irreplaceable” studios, increasingly efficient video and consumer technology to produce more programming at lower costs, and a core of affluent female repeat customers who spend more each year.

With traditional TV services like Comcast Xfinity losing customers, Qurate has lately launched QVC and its smaller, Florida-based HSN channel through services such as Roku, Amazon Free, and Vizio Smart TV, and are also available through Qurate’s new livestream app Sune. The company says that more than two-thirds of its revenues now comes from computer and smartphone shoppers.

Analysts say Qurate can stay in business at least as long as the company’s major shareholders, Liberty Media founder John C. Malone and Liberty executive Greg Maffei, share Rawlinson’s confidence — and a willingness to bet on better times ahead.

Hollywood East

Started by serial business-founder Joseph Segel in 1986, QVC fast became an icon of American television. In the early 1990s, Fox Broadcasting cofounder Barry Diller used QVC to start his own media empire. In 1995, Comcast bought majority control and then in 2003 sold its shares to Malone’s Liberty Media, in a deal valuing the company at $14 billion. Liberty sold shares to the public, but Malone and Maffei kept control of voting shares.

The company now employs 19,000 people worldwide, including 2,000 at its Bethlehem warehouse and at other eastern Pennsylvania sites, in addition to the West Chester headquarters.

Celebrity salespeople like Dolly Parton augment a brigade of homegrown presenters, who, starting in the 1990s, drew busloads of eager viewers to its West Chester studios.

“Such an iconic brand. There were lines of tourists. You had to book hotels ahead of time,” recalls Gary Smith, head of the Chester County Development Council. The public tours ended in 2019, as security costs escalated.

With Qurate’s evolving audience platform, presenters and producers are broadcasting and streaming more content than ever in the company’s home-, kitchen-, and resort-like studios. This year’s content includes QVC’s second yearly full-length holiday movie “The Recipe Files” with Ashlee Simpson.

Many cameras are automated. Upstairs from the studios, specialists sit in screen-lit control rooms analyzing live data and whispering into presenters’ headsets about which products are selling and which keywords they should speak out loud to help boost sales. Qurate also owns the smaller, rival HSN home-shopping studios in Florida.

Malone and Maffei proclaimed their confidence in CEO Rawlinson’s recent cost-cutting and plans for boosting profits at a meeting with investors Nov. 9.

But Malone also acknowledged that they need to do more than break even: “You don’t want to tread water in business, or the sharks will get you,” he said. “You need growth.”

Seismic shifts in media

“Trends are in our favor,” Rawlinson said in a recent interview. Both media and e-commerce “are shaking out,” and companies with their own studios and warehouses have already proven more durable than online-only enterprises.

“We’re in the middle of seismic shifts in the media and a maturation of e-commerce,” he said. “So here we are, with our own ecosystem — a lot of people we have trained, who know hosting and production, programming and retail pricing and merchandising. That will be fairly hard to replicate. That is the opportunity available to us.”

QVC and HSN together boast around 8 million annual customers in the U.S., down from 9 million last year. The company says a smaller core of the most dedicated viewers buys an average of 75 items a year and have been spending more lately.

In media and in retail — fragmented, fast-changing industries — “there’s a big fight for attention” from consumers, said Rawlinson, who lives in Wayne and unwinds at Sixers games.

With the company rushing to get its merchandise into streaming apps, podcasts, and other new media, Qurate has speeded production of its live and recorded programs.

“A lot of our hosts are local people,” Rawlinson noted.

Indeed, QVC has created a local network of media and tech professionals, and smaller area firms such as RevZilla and Turn5 have built their own QVC-style studios and techniques to sell products such as motorcycle accessories or sports-car and truck upgrades.

The company has also expanded offices in New York, where tech and media talent is concentrated. QVC has so far bypassed Philadelphia, but “we’re open” to expanding into that city, Rawlinson added, “when we see the need.”

Fire and plague

Since joining Qurate, Rawlinson has led the company out of a series of crises that cut deep into profits:

In December 2021, a warehouse in Rocky Mount, North Carolina, where Qurate had concentrated its U.S. distribution, burned down, killing a worker, destroying products, and disrupting deliveries. Damage was so extensive, Qurate decided not to rebuild. The fire’s cause could not be determined. The company has replaced Rocky Mount with a less-centralized distribution system, Rawlinson said, where “our goods are closer to the customer” and shipping costs less. Insurance paid QVC $660 million for fire-related losses this fall, enabling the company to buy down debt and reducing financial pressure, though it still faces $2 billion in debt coming due over the next three years.
The pandemic temporarily boosted video viewership, but shipping dislocations from foreign suppliers and U.S. transportation disruption made it tougher to fill orders.
Zulily, the Seattle-based shop-by-smartphone company that Qurate paid $2.4 billion to acquire in 2015, lost money relentlessly as managers struggled to make its deliveries more reliable. Rawlinson finally sold the remaining operations at a fraction of what the company paid earlier this year.

Wall Street showed a corresponding lack of confidence in the company this year. In March, S&P Global Ratings cut Qurate’s credit rating to CCC+, a junk-level rating that implies bond investors could lose their money because of the company’s “potentially unsustainable” debt load.

That helped drive the share price below $1, for the first time since the stock was traded in 2006. Shares recovered to around 65 cents, from 40 cents, after sales slipped but profit margins began recovering in Qurate’s Nov. 3 earnings report. It’s still measured in dimes, not dollars.

Bankruptcy isn’t an attractive option, said Theodore Glavin IV, Wilmington-based managing director of Gavin/Solomonese, a corporate bankruptcy and turnaround consultancy.

“If you break it down into component businesses, it’s a broadcasting media company, plus an Amazon-style retailer but without all Amazon’s infrastructure,” Gavin said. Those businesses don’t attract high prices, these days.

“Someone could operate the channels in a more niche market and a scaled-down version,” if they bought it as cheap as the share price implies Qurate is worth, he said. “Or, you are looking at a liquidation.”

“Their primary backers and owners will be key to what happens here,” Gavin said. “There comes a point when investors are not willing to throw more good money after bad. Only they can decide what that point is.”

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