Because vendors find themselves making less of a profit than they'd like, networks are rethinking the financial formula by which home shopping channels operate. Alternatives to the most common setup -- where the network serves as retailer by buying, marking up and reselling products -- are already evident, with the goal of bigger profits for the network as well as the vendor.
The latest was revealed last week, when Home Shopping Network announced it will launch Television Shopping Mall, which will sell air time and support services to retailers and catalogers, rather than taking a cut of sales.
Catalog 1, a joint venture between Spiegel Inc. and Time Warner, is taking a similar approach. Essentially a video mall, Catalog 1 allows participating catalogers such as Neiman Marcus and Eddie Bauer to use their own fulfillment and order-taking systems to cut costs.
RSTV, the Knoxville, Tenn.-based home shopping network, however, is perhaps the most experimental of all -- possibly because it is still relatively small. RSTV began last August by selling air time to catalogers such as Hanover, Lenox Collectibles and Royal Silk, who are responsible for their own fulfillment.
Now, RSTV is getting into the manufacturing and production business. Keith Halford, RSTV's chief executive, said the company is planning to develop apparel lines and marketing concepts for celebrities. The first, as reported, involves a large-size clothing collection from Roseanne Arnold.
RSTV has more concepts on the way, including a jewelry and accessories show and a line of hair care products. It is also opening a TV studio in New York to facilitate involvement by SA. The programs produced in New York will be uplinked to ViaTV, one of RSTV's stations in Knoxville, via satellite and fiber optic lines.
"SA is the source of most of the product so far, so we will take the mountain to Muhammad instead of waiting for Muhammad to come to the mountain," said Halford.
Halford declined to discuss volume, saying, "We're in a quiet period. We're in consideration of being reviewed by the Securities and Exchange Commission for an initial public offering." However, according to sources, RSTV is expected to do $100 million in the first 15 months. Stanley Warner, the president of 77 World Design, which licenses Ted Lapidus, Adrienne Papel and Adolfo for men, is working with RSTV through a new company he created called CelebSales, which licenses the Roseanne and Tom Arnold names. Warner is also acting as the conduit for RSTV's other New York programming.
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