Sales at Home Shopping Network dipped in the first quarter because the network was caught by surprise when its phone-in shoppers shifted their interest from jewelry to hardgoods like electronics, collectibles and housewares.
Despite that setback, earnings for the New York parent of Home Shopping Network increased sharply.
Overall, USA Networks, the collection of cable operations led by Barry Diller, said its net income for the quarter ended March 31 was $33.9-million, or 17 cents a diluted share, on revenues of $523-million. That's up from $3.8-million, or 4 cents a share, on revenues of $280-million in the first quarter of 1997.
The company attributed a 4.7 percent dip in retail sales, primarily at St. Petersburg-based HSN, to "an unanticipated shift in consumer demand."
The result: HSN sold some jewelry at lower profit and lacked enough inventory of hotter-selling goods in January and February. USA Networks said the downturn was reversed by March and it expects HSN to perform well for the remainder of this year.
The gains for USA Networks were fueled by a 23 percent increase in revenues for its cable business, including advertising at the USA Network and Sci-Fi channels, as well as by acquisitions and gains on the sale of certain assets.
Wall Street likes USA Networks' direction. Under chief executive Diller, the company has more than doubled its stock price in the past year. Shares in USA Networks closed Wednesday at $25.06\, up $1.06\.
Earlier this year, Seagram Co. sold USA Networks and other cable TV assets to Diller-controlled HSN Inc., which then changed its name to USA Networks Inc. Home Shopping Network is a subsidiary whose quarterly revenues of just less than $250-million make up more than a third of USA Networks' sales.
HSN's corporate contribution may shrink as USA Networks' cable and TV assets, driven by Diller, become the company's primary focus and other recent acquisitions expand, among them a controlling stake in TicketMaster.
USA Networks cited strong cable network performances for much of its quarterly momentum. The company's USA Network is the most-watched cable network in the country, and its March showing of the remake of Moby Dick became the most viewed entertainment programs in cable TV history, the company said. The Sci-Fi Channel enjoyed record subscribers and recently cut exclusive deals to show such sci-fi series as The Outer Limits and Poltergeist: The Legacy.
At HSN, spokesman Gerry Hoeppner acknowledged the TV retailer's softer sales in the quarter. But he said HSN was shifting its mix of on-screen products to reflect less jewelry and more clothing fashions, more cookware, more cosmetics and a wide range of collectibles from dolls to sports memorabilia.
HSN, which employs 3,000 in St. Petersburg, also will become more sensitive to events and trends that lend themselves to sales tie-ins, Hoeppner said. This weekend, HSN will break from its regular programing as soon as the 124th running of the Kentucky Derby is over to offer Derby collectibles.
HSN also has sold collectibles tied to the current fascination with the Titanic, not to mention 1,600 cartons (at $40 apiece) of soup made by Al Yeganeh _ the gourmet soup chef immortalized for Seinfeld fans as the "Soup Nazi."