HSN will lose its last foreign broadcast entanglements — shared ownership in TV shopping channels in China and Japan — when the St. Petersburg-based network is spun off next month from Barry Diller's IAC/InterActiveCorp.
Diller decided to keep the joint ventures in Asia in his collection of 35 e-commerce businesses when he breaks the conglomerate into five pieces and releases his grasp on HSN after 13 years.
HSN has had a 30 percent ownership stake in Shop Japan since the channel was launched in 1996 in a joint venture with John Malone's Liberty Media and the Japanese Sumitomo Electric Industries Group. Unlike the U.S. version of TV shopping, the highly profitable Japanese channel deals mostly in luxury goods.
"We're not a financial partner (none of Shop Japan's results appear on HSN's books), but the stake is worth a couple hundred million dollars, so it's appropriate to keep it with IAC," said Tom McInerney, chief financial officer of Diller's IAC. The value of the Chinese joint venture with TVSN in Shanghai has been written down to almost zero.
Rival QVC has achieved most of its revenue growth in foreign markets. In constrast, HSN had a 12-year roller coaster overseas before pulling out of the United Kingdom, Italy, Austria, Switzerland, the Netherlands and, in 2007, Germany.
Diller's IAC on Wednedsay reported a net loss of $422-million, or $1.51 a share, in its final quarterly report as a far-flung conglomerate. That compared with net income of $95-million, or 31 cents a share a year ago in the quarter ended June 30.
HSN continued its rebound with an 11 percent gain in sales to $461-million. But results were dragged down, thanks to a 12 percent sales decline at the company's Cornerstone Brands catalog business. If reported as a standalone business, the new HSN would have had net operating income of $31-million, down from $38-million. The network reported gains in units shipped, average price paid and active customers.
"The momentum continued into July," said Mindy Grossman, HSN chief executive officer.