SATH - Looks good - and they are profitable.
Shop at Home Network Targets Men
By HANNAH WOLFSON
.c The Associated Press
NASHVILLE, Tenn. (AP) -- Turn on the Shop at Home network any evening and you'll probably find two husky-voiced hosts hawking Mark McGwire rookie cards, autographed NFL jerseys, antique swords or the latest high-tech hardware.
You won't see much of the plush velour robes and sparkling cubic zirconia traditionally associated with home shopping networks. That's not what Shop at Home's audience is looking for -- because the audience is mostly men, 35 to 55 years old.
That demographic didn't happen by accident, said Kent Lillie, Shop at Home's president and chief executive. He took over the company in 1994 when it only was available by satellite and made it a nationwide cable network.
''I knew we could never out-QVC QVC,'' said Lillie, referring to the network that dominates the $3.5 billion home shopping industry. ''They were the best, they were far bigger and we were going to get eaten alive if we tried to be like them. So we had to be something different, and it became obvious to me that it had to be men.''
Now, 55 percent of Shop at Home's buyers are men, compared to about 25 percent for QVC and its chief rival, the Home Shopping Network.
The male focus evolved when Shop at Home tried to break into cable TV, only to find most cable providers unwilling to add another home shopping channel. So, Shop at Home ended up using other cable stations' dead air in the middle of the night -- when most viewers are men.
Though still dwarfed by QVC and the Home Shopping Network, Shop at Home has grown steadily, from $21.7 million in revenue in 1994 to $40.7 in 1996 and $100.5 million this year. The company turned its first profit -- a small one -- last year.
''They've obviously done a very good job with the male customer,'' said Andrew Hill, an analyst with Wellington Hill Financial, an investment management organization in Naples, Fla. ''They were smart enough not to try to copy the others.''
While Shop at Home narrowed its customer focus, it expanded its availability from 4.5 million satellite dish-equipped homes in 1994 to 47 million cable homes today, though only 6 million get the channel 24 hours per day.
The company owns local television stations in Boston, Houston, San Francisco, Cleveland, and Raleigh, N.C., and also runs a sports memorabilia company, Collector's Edge of Tennessee Inc.
It moved into a high-tech $15 million headquarters in Nashville in September and is looking to expand its Internet shopping site.
It's a far cry from the company's early days in 1986. Back then, founder Joseph Overholt taped shows at the Newport, Tenn., police station -- the only place in town with a video camera -- broadcast them to satellite dish owners, then took calls on his home phone. At first he only sold satellite equipment, but expanded to include real estate, novelty toilet seats -- even his neighbors' used cars.
In 1993, the company -- by then under its second owner -- moved to Knoxville and tried to expand. Instead, Shop at Home nearly went bankrupt, racking up a $1.8 million loss in fiscal 1994.
That's when Lillie, vice president and general manager of Fox's Atlanta affiliate, took over. Overholt, who now owns and runs a software development company, remains on the board of directors.
Lillie kept the company at its headquarters in a Knoxville strip mall, dumped the satellites and made a move into cable, which offered millions more viewers.
He decided not to make Shop at Home an inventory center -- most of the products it sells are shipped directly from the distributors -- which saves the company from having to store and handle merchandise. And last year, Lillie upgraded the network's phone system and launched the Internet site
Despite its growth, Shop at Home still faces an image problem on Wall Street. Its stock, which trades on Nasdaq's SmallCap Market, generally has sold at around $4 per share, though it dropped to $1.88 in early October and then shot to a record $8.75 just after Thanksgiving before falling again.
Hill said the company has promise but has yet to show it can be a consistent moneymaker.
''They're growing fast and they've spent a lot of money on infrastructure, but I can't see them making much money'' in the very near future, he said.
Lillie said Shop at Home is poised to improve its bottom line, and the Internet will be the key. The company is adding more products and developing new technology that will allow Internet customers to access archived shows in video format, then buy those products online.
Even with the new business, Lillie is realistic. Shop at Home will remain well behind the two giants of home shopping for the foreseeable future, he acknowledged.
Meantime, the show goes on.
On a huge screen in the lobby, two muscular men are selling fat-conversion kits while technicians behind the scene fiddle with graphics for a ''Furby Alert.'' Shop at Home says it's the only network with the hot new toy, and they're selling fast at nearly $150 apiece.
In a downstairs office, Lillie grabs a signed T-shirt country singer Vince Gill wore to a celebrity basketball tournament in Nashville and spreads it out on an employee's desk. It's supposed to be sold on Christmas Day. It won't make it to then.
''I think I'll buy that one myself,'' Lillie said.
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AP-NY-12-22-98 1307EST
Copyright 1998 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.
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