HSN’s Results Never Quite Lived Up to the Hype

Home Shopping Network was one of the hottest new stock offerings of the 1980s--the Netscape Communications of its day.

Home Shopping raised $36 million in its initial stock offering in May 1986, only to see the company’s market value balloon to $4 billion by early 1987 on wild projections about the earnings prospects of the business.

The stock, adjusted for splits, rocketed from $3 at the offering price to a peak of $47 in 1987, a nearly sixteenfold increase.

In contrast, Internet-craze symbol Netscape increased about fivefold from its offering price last year to its peak price of $87.

Founded in 1977 by Lowell Paxson, a Tampa, Fla., radio station owner, and Roy Speer, a real estate developer, Home Shopping at first hawked goods over radio in the Tampa area. In 1982, the firm launched a cable TV station in Tampa to do the same thing. Sales grew, and by 1985 Speer and Paxson had strung together a national cable TV network. The merchandise Home Shopping sold--especially low-priced jewelry and knickknacks--along with its choice of often corny show “hosts” lent a cheesy feel to the operation, but many Wall Street analysts viewed the shop-over-the-airwaves concept as having enormous potential.

Yet Home Shopping never delivered results to match the hype. The company saw revenue rocket from $160 million in 1986 to $774 million in 1989, but earnings remained minimal through the 1980s.

In the 1990s, the company’s revenue growth hit a wall: Sales stagnated at between $1 billion and $1.1 billion a year from 1990 through last year.

Earnings peaked at 42 cents a share in 1992. By last year, when Barry Diller began to get involved in the company, it was bleeding red ink and lost 69 cents a share for the year.

The stock has mostly traded between $6 and $16 a share in recent years. It rose 12.5 cents to $11.375 on the New York Stock Exchange on Monday.