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Hold the Steak Knives: QVC Falls On Harder Times


Consumers in no mood to pay $29.99, $19.99 or even $9.99.

I've never bought anything from QVC (LINTA) - but I'll admit I've been tempted. Years ago, I'd find burly men screaming at me from the television late at night, telling me about a once-in-a-millennium opportunity to buy a set of Barry Bonds cards or mint-condition collectible coins. It was so hard to resist.

Unlike me, millions of Americans don't even try. The Liberty Media-owned QVC -- which stands for Quality, Value and Convenience -- epitomizes America's consumerist ethos: Shopping as sport. That we're a debtor nation owes in some part to QVC - or, to be fair, a culture that would produce such a channel. But, as our departing president implored us after 9/11, it is our civic duty to go shopping. Even if that came on a borrowed dime - or a few trillion of them given the size of our national debt.

QVC, which was founded in 1986 by Joseph Segel, changed the retail landscape. Today, it broadcasts live 24 hours a day, 364 days a year (it has an online shopping site as well.) I've met people who watch QVC raptly as if it were One Life to Live. The television channel, according to the website, reaches more than 166 million homes in the US, UK, Germany and Japan. Net sales exceeded $7 billion last year.

That you'd actually have to leave your house to purchase a juicemaker or cubic-zirconium ring seems like something out of the Stone Age. As Americans continued to spend and spend, maxing out their credit cards and borrowing against their houses, QVC's fortunes rose in tandem. Depressed housewives planted themselves on their sofas and bought stuff they didn't need, like Chuck Woolery's Extreme Weather skin cream (yes, Woolery of The Love Connection fame) -- only 2 easy payments of $9.99! -- while upstairs little Tommy dulled his brain on video games and glue-sniffing.

I don't mean to single out QVC. There's also its smaller rival Home Shopping Network (HSNI), which actually started the TV retail experience 31 years ago. HSN does about half the sales of QVC, and is broadcast to 90 million homes. It also sells products online. In August, IAC/InterActive (IACI) spun off HSN, along with 3 other businesses.

But this recession has changed everything. The last few months have seen a sea change, as retail spending basically stopped in its tracks. A report Friday said US retail sales fell 1.8% in November, the fifth straight decline, and 7.4% lower than the same month last year. Businesses also cut their inventories by the largest amount in 5 years.

QVC has about $8 billion in debt on its books, but Liberty Media has expressed confidence in QVC's ability to meet its debt covenants. However, in a clear response to the slowdown, officials said they would phase out 700 jobs, or 5.8% of QVC's US workforce, over the next 13 months. HSN is also saddled with debt - and investors have noticed, sending the stock below $2.

Still, the fact remains that QVC has become an institution in this country, intertwined with its real national pastime - consumerism, which is as American as apple pie. Surprisingly, I couldn't find apple pie on QVC's website. You'll have to settle for pecan pie, brownie cake, carrot cake, or one of dozens of varieties of cheesecake.
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