Cable's Home Shopping Network Holds This Truth to Be Self-Evident—No American Should Pay Retail
updated 08/11/1986 AT 01:00 AM EDT
•originally published 08/11/1986 AT 01:00 AM EDT
"You're looking at a little Seiko TV for outdoors," she gushes. "It's used absolutely anywhere. You know it's an unbelievable buy with a velour carrying case. Originally $514, but yours for only $185!"
The calls start immediately and run to thousands each day from all over the country, handled by 100 or so operators.
"Is it really a good price?" asks a woman on the 800 line.
"Oh, yes," assures Bobbi as a number in the corner of the television screen advances rapidly, showing America how many sets have already been sold.
"I've never seen one at such a price," exclaims the caller.
"Whaddaya say we take your credit card number and send you the TV?"
And so it goes, live 24 hours a day, seven days a week, as bell-ringing, horn-honking hosts like Bubblin' Bobbi and Tiny Alice in Bargainland peddle zircon diamonds, porcelain figurines, housewares, giftware and acres of electronic what-nots (usually at one-third to one-half off retail) to 5.2 million cable receivers. The wackiest, tackiest concept in TV—half flea market, half telethon—Home Shopping Network is hotter than a tag sale at K mart.
But, hey, it's noon already and here's smiling "Budget Bob" Circosta, 36, former actor, who's just finished reading from one of his 2,000 weekly viewer letters. "I'm here to show you items never presented anywhere! Here's a 48-inch strand of man-made pearls—$29.95. But wait till you hear this. We're not going to do it for $19! Not for $15! Not for $12! For only $9.95! But wait a minute—we're not done!"
They sure aren't. Since its start in July 1985, HSN has posted $84.9 million in sales. On May 13 the company made its first public stock offering of two million shares at $18 per. The stock closed that day at $42 and has since reached $108, "really captivating Wall Street," says John Reidy, media analyst for Drexel Burnham Lambert.
"We're an impulse buy," HSN's Roy M. Speer explains. Chairman of the company he founded in 1977 with his partner, Lowell "Bud" Paxson, Speer, 54, is the money man behind HSN. An attorney who became "disenchanted with the law," Speer also dabbled in Texas oil and Puerto Rican vegetable farms. Now a millionaire, he owns a water supply and sewage treatment company that services his real estate development in Pasco County, just outside Clearwater.
Company president Bud Paxson handles the promotional work that Speer detests. Paxson, a former radio host, best formulates the HSN vision: "All America loves a bargain and none of us likes to pay retail." Born in Rochester, N.Y., Paxson worked at and owned several radio stations in the East before buying Clearwater's WWQT-AM. Unable to attract advertisers, he teamed up with Speer in 1977 and turned WWQT into a kind of Sears catalog of the air.
The idea took off from day one. In 1982, after Clearwater was wired for cable, Speer and Paxson switched to local cable TV. Known as Home Shopping Channel, the 24-hour program was seen at first in fewer than 200,000 area homes. Revenues were less than $1 million that year, but by 1984 they'd risen to $11 million, and plans to go statewide were scrapped in favor of shooting for the national market. Now earning base salaries of $250,000 and $215,000 respectively, Speer and Paxson head a company with $18 million worth of computers, 1,200 employees (mostly order-takers and warehouse employees) and a battery of 350 to 400 "finders" who scour the world for closeouts, liquidations and auctions.
Naturally, anything this successful cries out for duplication. Cable Value Network, an 88-hour-a-week program, debuted in May. Financial News Network and Horn & Hardart are said to be considering similar network operations, while regional shows are starting throughout the country. The mushrooming opposition has already caused defections from HSN's ranks. Popular host "Discount Dan" Dennis has left to join a competitor. So has chatty Carmella Richards, considered by many viewers to be the network's star. "Her head got too big," sniffs "Diamond Jim" Brecher, 38, chief of HSN's 17-host team. "It's up to the hosts to mold their personalities to the format. We're not Dan Rather."
Aggravation from within and without hasn't cowed the bullish HSN. In March the company introduced upscale Network 2, offering trendier items such as designer clothing and VCRs; and the new channel now has two million subscribers of its own. "We welcome competition from other companies," boasts Paxson. "They'll prove exactly how good we are." There is, in fact, a sense of high-pitched, Dale Carnegie confidence on the HSN set, an enthusiasm born of the knowledge that here two of America's favorite things—TV and shopping—have been fused into one delirious, go-for-broke, never-ending commercial.
"Are you having a good time?" Budget Bob asks his lucky caller.
"Sure!" says Muriel of Portland, Maine. "I'm buying a lot of things I didn't even know I wanted to buy."