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Vendor says Speer wanted secret deal

A former Home Shopping Network Inc. vendor says he was cut off from the video retailer nearly three years ago after he spurned chairman Roy M. Speer's efforts to take a secret 50 percent stake in one of his companies.

The Southern California supplier, Louis Knickerbocker, said Monday that Home Shopping then tried to lure away celebrities he was representing at the company, including Farrah Fawcett and Phyllis Diller.

Knickerbocker said he will tell his story shortly to a federal grand jury in Tampa that is looking into allegations of improper relationships between suppliers and Home Shopping executives.

Civil lawsuits have charged Speer and others with having secret stakes in vendors. Knickerbocker offers the most specific allegation to date of how an executive may have sought such an interest.

Speer did not return telephone calls. Celia Bachman, Home Shopping's general counsel, said it is company policy not to discuss relationships with vendors.

Knickerbocker, who had previously owned a Mexican restaurant chain, said he began his relationship with Home Shopping in 1987 when he and his wife introduced a home nail salon kit to the company.

Shortly afterward, Knickerbocker met Dr. Michael Elam, Diller's plastic surgeon, at a social event. Together, they developed a face cream and arranged for Diller to be its spokeswoman.

The product was a smashing success. In a single weekend in August 1988, Knickerbocker said, they sold $997,000 worth of "Creme de la Vie" face cream on the St. Petersburg-based television retailer.

By 1990, Knickerbocker had five different companies selling jewelry, cosmetics and clothing on Home Shopping. His celebrity spokeswomen included Fawcett, Diller and Rue McClanahan.

Knickerbocker said sales to Home Shopping reached $18-million at the wholesale level, or roughly $55-million retail _ a sizable chunk for a single vendor in a fiscal year when total Home Shopping revenues were just over $1-billion.

Knickerbocker said Speer approached him with a proposal to arrange for a $10-million line of credit for the vendor's business if he gave Speer a 50 percent stake in a new company called Knickerbocker Creations Ltd.

"I would have gladly taken the $10-million line of credit," said Knickerbocker. "I wanted to do it."

But then Speer asked that the new stock be issued on certificates with the recipient's name left blank, Knickerbocker said. He said he checked with his attorney, who advised against going ahead with the deal.

"He said you can't do that. It's not right," Knickerbocker said.

Federal guidelines require a public company such as Home Shopping to disclose the interests of its officers and directors in related businesses.

"I said, "Roy, is there any way I can issue it in somebody's name?' " Knickerbocker said. "He says, "You're through. You're out of here. I'm phasing you out.' "

Meanwhile, Knickerbocker said, he recently learned that his No. 2 executive from that time, Paddy Costeloe, was being enticed by Home Shopping to set up his own company, Over the Moon Inc.

Diller confirmed that Costeloe asked her to stay at Home Shopping without Knickerbocker. She said she was offered more money.

"My loyalty was to Lou Knickerbocker, who is honest," she said. "If things were being done behind his back in a slippery way, I didn't want to get mixed up with the wrong side."

Costeloe did not return a telephone call Monday.

As recently as this April, Knickerbocker said, he attempted to revive his business with Home Shopping. He said he cooperated with an investigator for Liberty Media Corp., which bought controlling interest of Home Shopping in February.

Knickerbocker said he was initially promised new orders. But then, Knickerbocker said, he was told that he would never be let back into the company because he had told the investigator of his falling out with Speer.

"I go through all this. I don't say anything. I get all prepared to go back. Then (they) put the skids on it," Knickerbocker said. "I decided enough is enough."

Knickerbocker said he found out last month from Doc McGhee, a rock music promoter and Home Shopping business partner, that Speer and other executives opposed his return.

Knickerbocker said McGhee reminded him that although Speer gave up his title as chief executive when control of the company was sold to Liberty, he remains as chairman and a large Liberty investor.

Liberty is also a large shareholder in QVC Network Inc., with which Knickerbocker now does business. " "Roy Speer will have you thrown out of QVC,' " Knickerbocker said McGhee told him.

Bachman said any decision related to Knickerbocker had nothing to do with conversations he may have had with an investigator. McGhee could not be reached for comment.

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