Diller Wins Top Billing For Qvc A Hollywood Success Saga, Coming To You Live From W. Chester.

Posted: September 22, 1993

Our story begins at an industrial park in East Goshen.

QVC Network Inc. is in the chorus line, an undiscovered home-shopping channel pushing ersatz jewels and exercise equipment late into the night.

Then, like a plot out of a Hollywood movie, the lowly telemarketer is discovered by communications moguls and Hollywood impressario Barry Diller.

Less than a year later, QVC is now the biggest star on Wall Street, bidding $9.5 billion for its own Hollywood studio, the legendary Paramount Communications Inc.

"It's a big deal, obviously," said Joseph M. Segel, QVC's founder and chairman emeritus. "Here you have a little company just sprung out of my imagination seven years ago, which is evolving into something far beyond what I intended - and possibly can become one of the entertainment and communications giants of the world, headquartered in sleepy old West Chester."

"I find it entertaining, exciting and gratifying, because I had a role in starting the company," said Segel, who still owns a big block of QVC stock.

"But it's Barry's show now."

In the nine months since Barry Diller, the former head of Paramount and Fox Inc., became a partner and chairman of QVC, he has had a glittering effect on the company, whose headquarters is at the Goshen Industrial Park outside West Chester.

QVC has undergone a series of dramatic changes since late last year, when Diller bought a stake in the company, which employs 2,000 in Chester County.

Diller has upgraded QVC's screen image with new sets and graphics and a classier, low-pressure sales pitch.

He introduced merchandise from more-upscale companies, including Saks Fifth Avenue in May, and lured a string of celebrities and high-fashion designers to QVC's studios.

Diller's presence at QVC has also brought new cachet to the home-shopping business in general. In the last year, QVC's efforts have, in part, inspired other companies, including Macy's, Bloomingdale's and the NBC broadcast network to begin home-shopping experiments.

In July, QVC proposed a $1.4 billion merger with its Florida rival, the Home Shopping Network. That deal is pending.

Also in July, QVC announced a new channel, called Q2 - with production facilities in New York and Los Angeles - that would replace its fashion channel.

Next month, QVC is to launch a joint venture with British television that would bring home shopping to Europe.

But the proposed acquisition of Paramount is, by far, Diller's boldest move.

"There have been a bunch of different moves going on (at QVC). It's interesting that the shopping network would take that broad of a franchise

from what was once a narrow and specialized niche," said Philip Johnson, president of Leo J. Shapiro Associates, a Chicago marketing firm.

Like many analysts, Johnson is confident in Diller and his partners: "I don't know where they're going," he said, "but I assume they have good reason to go there."

Some analysts said that if QVC's bid to acquire Paramount were to succeed, it would alter the company's focus as a retailer.

"The company is making some interesting changes to become more of a communications company," said Linda Morris, a retail analyst with PNC Bank. ''An acquisition like this would put less emphasis on the retailing aspect."

In recent months, Diller has made several key hires at QVC, many from the top ranks of television production and retailing. This month, for instance, James G. Held, a senior Bloomingdale's merchandise executive, was named QVC's senior vice president of business development.

These additions could supply QVC with the the programming and merchandising depth to run itself while Diller turns his attentions elsewhere.

"Barry Diller used to run Paramount and has his own set of priorities and interests," said Gilbert Harrison, chairman of Financo Inc., a New York investment banking firm that specializes in retailing.

Harrison said he imagines Diller is more interested in building a "mega- entertainment Goliath," perhaps including news, entertainment, and other kinds of programming.

The common thread in all these activities, he said, is a television future in which viewers interact with their television sets, perhaps choosing their own news stories, or movies, from a hand-held remote control.

Ordering merchandise through QVC's 800-number is a primitive form of this interaction.

"Interactivity," said Harrison. "That is the common denominator."

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