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ValueVision Media Inc. (VVTV)

Q4 2008 Earnings Call

January 27, 2009 10:00 AM ET


John D. Buck - Chief Executive Officer

George Vandeman - Chairman, Special Committee

Frank P. Elsenbast - Senior Vice President and Chief Financial Officer

Keith R. Stewart - President and Chief Operating Officer

Nathan E. Fagre - Senior Vice President, General Counsel and Corporate Secretary


Jamie Lester - Soundpost Partners

Robert Evans - Craig-Hallum Capital

Michelle Graff - National Jeweler Magazine

Bill Briggs - Internet Retailer

Debra Fine - Fine Capital Partners

Richard P. Mansouri - DellaCamera Capital



Good morning and welcome to ShopNBC's Strategic Alternatives Review Process and Preliminary Results for Fourth Quarter and Full Fiscal Year 2008 Teleconference. Following today's presentation, there will be a formal question and answer session. At that time, instructions will be given. Until that time, all lines will remain in a listen-only mode. At the request of ShopNBC, today's call will be recorded for instant replay. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Ms. Nancy McGrath (ph) of ShopNBC. You may begin.

Unidentified Company Representative

Good morning. Today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Listeners are cautioned that these forward-looking statements may involve risks and uncertainties that could significantly affect actual results from those expressed in any such statements. More detailed information about these risks and uncertainties is contained in ShopNBC's filings with the Securities and Exchange Commission.

I would now like to turn the call over to Mr. John Buck, ShopNBC's Chairman of the Board.

John D. Buck

Good morning and thank you for joining us and thank you Nancy.

I hope you've had a chance to review the multiple press releases issued this morning. Our series of communications may seem lengthy, but I am sure you can appreciate this is a critical time at the company and there are a number of important items we want to review with you today. And then we will take questions at the end.

When we last spoke, I said we'd get back to you by the end of the fiscal year with an update on the strategic alternatives review process. With the timing being so close to the end of the quarter, we decided also to report preliminary results for the fourth quarter and fiscal full year 2008 as well.

Given the outcome of the review process, which we will plan to address in detail, we wanted to share with you the many initiatives underway at the company to improve performance and build a roadmap for the future.

Let me begin by saying that fiscal '08 was very challenging and our preliminary financial results for the fourth quarter and full year are clearly unacceptable. We have gone to great lengths, implemented significant changes at the company this past year in an effort to turn around this business.

As I announced in August, we embarked on two parallel paths to achieve these goals: one, explore strategic alternatives for the company and at the same time manage the business on a go forward basis.

While I am very, very disappointed that we were unable to find a buyer or a strategic partner for the company at this time, I want you to know that we haven't closed the door on this option and we will remain open to all opportunities.

I'd also like to say that throughout the entire strategic alternatives review process, we remain fully engaged in running the business and implementing strategies to improve ShopNBC's operations as well as develop new corporate strategies designed to grow the company's EBITDA levels, increase revenues and rightsize our expense structure for '09, which we will talk about later in the call.

Part of these efforts includes changes and additions to the leadership structure at ShopNBC, our Board of Directors and at a strategic planning level at the company. As announced early this morning, I am pleased to report that the Board of Directors has promoted Keith Stewart to CEO of the company. We hired Keith back in August with the intent of naming him CEO following the transition period.

The Board has been very impressed with how he has demonstrated his vast industry experience, decisive leadership skills while achieving many organizational improvements at ShopNBC. He quickly assessed the needs of the company and swiftly implemented dramatic but necessary organizational changes to the fundamentals of our business that have led to improved efficiencies and positive business metrics. He has a strong vision for this company and great optimism for our future. I am confident you will find Keith's new '09 roadmap for ShopNBC to be quite compelling. Concurrent with his promotion, I have voluntarily stepped down as CEO as part of the company's succession planning and will remain Chairman of the Board.

As we have endeavored to reconstitute the Board this past year, I am pleased to report that Randy Ronning, a retail and TV shopping veteran with over 30 years of leadership experience, has joined our Board as a Director. Randy brings tremendous experience in TV shopping and e-commerce to our Board, and we very much look forward to his contributions and insights.

When added to other recent Board deployments, we know have strengthened our Board comprised of five independent directors through a broad expertise in distribution, multi-channel retailing and governance.

In addition to assist us in all areas of strategic planning and implementation, the company entered into a consulting agreement with Darlene Daggett. Darlene also an expert in multi-channel retailing, having 30 years of experience in this market space. We are excited about leveraging her highly relevant experience. Ms. Daggett will add incredible value to our company by serving as a Strategic Advisor.

We are fortunate to now have three of the industries' best minds Keith, Darleen and Randy helping guide us. People who have worked together in the past, people who are experts in multi-channel electronic retailing and people, who know how to get things done and succeed.

This is not to say our road to success hasn't been challenging or won't continue to be. The Board and management fully recognized the seriousness of our situation. And we are taking decisive action.

Despite our sales and EBITDA shortfall on the fourth quarter, meaningful improvements were made to our fundamentals in a number of key areas across the entire organization, while protecting our cash balance. This is encouraging and I'd like to highlight a few. Our biggest opportunity for savings as the company is in our cable and satellite negotiations. I think all of you are aware that I'd indicated many phone calls that this has been our biggest, biggest operational issue. And in some ways we've been really handcuffed.

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