A former executive of Evine Live and a team of business partners want to take over the business of the struggling Eden Prairie-based home shopping network in the hopes of making it profitable again and more relevant to today's consumers.
Marvin Segel, a veteran of the TV shopping industry, and Jim Morrison are co-founders of StarShop, a New York-based startup that works with Sprint. They say they have reached out to the management and board of Evine Live with their proposal, but have so far been rebuffed. So now they are planning to turn up the volume with outreach to shareholders, with the aim of putting pressure on the company to consider their offer.
Evine declined to comment to the Star Tribune.
"As a matter of company policy, we never comment on rumors and speculation in the market," a company spokeswoman wrote in an e-mail.
Despite the rapid changes in how people shop and consume media, Segel said the model for TV shopping hasn't changed much in 25-plus years with the industry still relying on a "two shot" with a host and a guest.
"It's the same, boring content," he said. "It's old and stale and it doesn't work on mobile."
To jazz it up, Segel and Morrison, who is StarShop's CEO, want to tap into social media influencers such as YouTubers with millions of followers in order to grow Evine's audience and reach new consumers. They also want to add a Spanish-language TV shopping channel as well as related Spanish content online and offer an enhanced experience on mobile.
Initially, the two said they hoped to work with the current board and management with a proposal to become a minority shareholder in exchange for a board seat and an executive position. But when that did not bear fruit, they shifted gears to an asset purchase.
Under their proposal, they want to buy the operating assets of Evine for a 30 to 40 percent premium of its total enterprise value of between $140 to $175 million. Segel and Morrison said it would leave Evine intact as a corporation so shareholders can reap the tax benefits of more than $100 million in net operating losses while pursuing other businesses.
They are also offering current shareholders an option to take as much as a quarter stake in their new private company. But they say the company has so far responded by just saying that the firm is not for sale.
The tug-of-war comes at a time when the TV shopping industry is facing myriad challenges as younger consumers cut the cord on cable and online retailers such as Amazon.com are gaining market share. In July, QVC and the Home Shopping Network, the two biggest players in the space who have also been grappling with declining sales, announced a $2.1 billion deal to merge.
Meanwhile, Evine, a distant third-place player in the industry, has undergone multiple turnaround efforts and executive changes in the last several years in an attempt to make the company profitable. In June 2014, activist shareholders took control of the board in a proxy fight and installed Mark Bozek as CEO.
Bozek changed the name of the network from ShopHQ to Evine Live and worked to diversify the company's merchandising mix away from its heavy reliance on jewelry and watches toward lower-margin items such as clothes, kitchen goods and beauty products. But as shares plummeted to under $1, he was pushed out in a management shake-up last year.
Bob Rosenblatt, the board chairman, took over as interim and then permanent CEO last year. He has been trying to rebalance the merchandising mix to focus on more profitable goods and reduce its sales of consumer electronics, which he says has lower margins and bring in one-time consumers.
This year, Evine has launched dozens of exclusive new brands and has been working to transition to HD. It also has started using social media such as Facebook and YouTube.
Last year a group of investors, including fashion designer Tommy Hilfiger and music executive Tommy Mottola, bought $10 million in stock in the company and became advisers to the company.
While revenue and profits have continued to slide, Rosenblatt told investors in August that the company is poised to show growth in the second half of this year. Meanwhile, the company's shares have been trading at just above $1.
Evine, which brought in about $666 million in revenue last year, has about 1,300 employees.
Segel, whose father founded QVC, came to work at Evine as a consultant in 2008 and then joined the company as an executive of vendor relations and business development. He worked there for several years until around the time of the proxy battle.
He became interested in making an offer for the company last year when he saw the company's shares had dropped below $1.
"I was shocked, quite frankly," he said. "I tapped Jim on the shoulder and said, 'Jim, we could own a shopping channel for relatively not a lot of money.' "
In March, they tapped the Lucas Group, a consulting and investment firm, to advise them.
If successful, they noted that they would be able to leverage StarShop's studios in New York and California for Evine to use. But they emphasized that they are committed to keeping the headquarters in the Twin Cities.