New leader for ValueVision has big plans

One day last month, Mark Cuban and nine entrepreneurs he's invested in on the show "Shark Tank" took over the Eden Prairie studio of the ShopHQ cable network and peddled their products.

Viewership doubled during the two-hour event, and some of the products sold out in minutes. Afterward, Cuban, the voluble tech billionaire, bounded through the control room, kitchens and offices greeting employees and asking about their work.

For the struggling company that owns ShopHQ, ValueVision Media Inc., the brush with one of the country's most recognizable business personalities marked a turning point to a turbulent year in which angry investors argued with managers and, ultimately, threw them out. And for the chief executive they just installed, it was a sign of the future.

"It was incredible, alive television," said Mark Bozek, the new CEO. "It was like, 'Wow, this is what it is supposed to be!' "

Bozek wants to give more airtime to dynamic personalities like Cuban — including but not limited to celebrities — and to sell more products that you can't readily find in other places, particularly its ShopHQ's far larger rivals, QVC and HSN.

A veteran of both rival companies, Bozek says ShopHQ's smaller size could be turned into an asset that will appeal to new, exclusive sales partners.

"They have a lot of vendors to keep happy," Bozek said, referring to the bigger shopping channels. "For us, we have some really solid vendors, but we have a lot of white space in terms of our 168 hours of programming. And so we can go into the marketplace and have that be our pitch."

Part of its challenge is steeped in its history. The ShopHQ channel, which operated under the name ShopNBC until last year, started by selling only jewelry and watches. Those products still make up nearly half of its business.

"There's not a very large segment of the consumer base that will spend hundreds of dollars on watches and jewelry from watching a home shopping channel," said Mark Argento, an analyst with Minneapolis-based Lake Street Capital Markets. "That's a finite, niche part of the market."

And it doesn't drive a lot of repeat business. After all, how many watches does one person need?

Under the previous management team, ShopHQ began to expand into categories such as consumer electronics and home goods, some of which were lower-ticket items that turned over more quickly.

"But they were gathering 'me-too' product," Argento added, referring to products widely available at other retailers. That's not a winning strategy when consumers can quickly compare prices online and can buy there or in stores.

Last year, the Clinton Group, a New York-based hedge fund, began campaigning to oust ValueVision's top executives and the board. The proxy battle was expensive and at times personal. In a letter to ValueVision shareholders in June, the Clinton Group said that as many as 10 senior executives regularly left work on Thursday to fly to their homes in Pennsylvania, Florida, and Texas. "Gone will be the million-dollar per year, three-day-a-week executives that have understandably bred resentment and loathing," Clinton Group vowed in its pitch to investors.

Other shareholders sided with the dissident group and voted its slate of directors to the ValueVision board in June. CEO Keith Stewart resigned, and the new directors tapped Bozek, a Long Island transplant who recently moved into a home in Minneapolis.

"I was in the middle of that process, and it wasn't particularly fun," Bozek said. "I wouldn't wish that scenario on anybody else, but I'm not necessarily unhappy with the result."

Since then, he's been trying to energize employees. He said that even small gestures have helped morale such as holding the company's board meeting for the first time in about a decade at the Eden Prairie headquarters instead of at a lawyer's office downtown.

Jon Stoltz, who is in charge of broadcast operations, has seen six CEOs since he started at ValueVision in 1998. "The fresh air is in now," he said. "The ideas are flowing again."

Bozek already has eliminated the job of chief operating officer and is looking for a new chief merchandising officer, after the former executive left last month.

Bozek also is working to leverage the expertise of new Clinton Group-backed board members. Ron Frasch, a former president of Saks Fifth Avenue, can help with merchandising. And Thom Beers, who leads the company that produces "American Idol" and "America's Got Talent," will be an asset as ShopHQ looks to make its programming more entertaining.

Bozek said he also wants to overhaul the merchandising approach to focus on exclusive products. These days, only about 25 percent of ShopHQ's products are proprietary. But within the next few years, he wants to get closer to 75 percent to be on par with QVC and HSN. To get there, Bozek said he's pushing employees to partner with manufacturers and launch new brands together.

Since he came on board three months ago, Bozek has already opened a small ShopHQ office in the West Village of New York City. While it's not much bigger than his own office in Eden Prairie, it provides a home base for employees when they travel to New York to meet with vendors. "If you want to be relevant, you've got to be in the line of fire," he said. "If the notion is, 'Well, next time you're in Minnesota, let me know,' if that's your offering, that's not a really good strategy."

On a recent day at the Eden Prairie headquarters, workers zipped in and out of five studios, moving sets around on wheels as they transitioned from one segment to the next.

While many people still phone in their orders, an increasing portion of sales — about 46 percent — comes in through its website or mobile apps. And Bozek hopes to resume 24-hour live broadcasting early next year. Last year, ShopHQ started using a tape during overnight hours to cut costs.

Stoltz said he expects employees will take advantage of Bozek's experience. "He listens to anything, and he'll kind of sit back and kind of blow things up a little bit too," the broadcast chief said. "Because we are stuck in our ways a little."

He added, "We've seen a lot of change, but this is a good one. This one feels really right."

Kavita Kumar • 612-673-4113

Patrick Kennedy • 612-673-7926