Liberty Interactive Eyeing China


Liberty Interactive Corp. (LINTA) is diversifying its businesses globally. The company’s TV and online retail segment, QVC Inc., recently entered into a definitive agreement to form a joint venture with China National Radio (CNR), the government controlled radio division of China.

The joint venture will be known as “CNR Home Shopping Co., Ltd.”  QVC will hold 49% stake and China National Radio will control the remaining 51% share. However, the financial terms of this venture is still undisclosed.

Around 35 million Chinese households watch China National Radio’s own home shopping TV channel, CNR Mall TV. The joint venture will further aggressively operate a multimedia retailing business in China through CNR Mall TV and its e-commerce website. At present, QVC’s programming is distributed to approximately 195 million homes worldwide.

Excluding the U.S., the company already has presence in the U.K., Germany, Japan, and Italy. Currently, the company is trying to extensively penetrate highly lucrative and large Chinese market. In future, QVC will try to enter other emerging markets, such as India and Brazil besides entering into France and Spain.

Liberty Interactive’s QVC division has become the undisputed market leader in the $8 billion TV home-shopping business. Currently, QVC commands an estimated 69% market share, far ahead of its nearest rivals, HSN Inc. (HSNI) and ValueVision Media Inc. (VVTV). In the previous quarter, QVC segment generated a total revenue of $2,649 million, of which nearly one third came from its international operations. The company is expecting this figure to reach 50% by next 5 years.

Liberty Interactive’s Internet operations are a primary growth engine. We expect QVC to continue leveraging its brand to rapidly grow its Internet operations. This segment currently generates approximately 87% of the company’s total revenue and 96% of profit. Exposure to a large emerging market, such as China will enable QVC to achieve a high rate of growth in future.

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