Homeshop18 (TV18 Homeshopping Network) will be acquiring a 74% stake in Shop CJ Network, reports The Economic Times. Shop CJ Network is a 50:50 joint venture between private equity investor Providence Equity Partners and South Korean firm CJ O Shopping. Following the deal, Providence will completely exit the joint venture and CJ O Shopping’s stake will be reduced to 26%, according to the report. The value of the deal is expected to be about Rs 180-200 crore.
Shop CJ, which was formerly known as Star CJ, was first launched in March 2009, as an equal joint venture between Star India and CJ O Shopping, with both companies reportedly investing $55 million in the venture. It started off as a six hour slot on Star Utsav channel and later launched a 24-hour channel Star CJ Alive in 2010. Later, an online marketplace called StarCJ.com was also launched in February 2011. In June 2014, Star India exited the joint venture by selling its 50% stake to Providence for an undisclosed amount.
It’s worth noting that since its launch in 2009, Shop CJ and HomeShop18 had been competitors. In fact, CJ O Shopping had positioned the deal with Providence in 2014 as a growth opportunity for Star CJ Network to take on HomeShop18. Since then though, both companies have had to contend with rough times, and especially so since e-commerce picked up momentum in the country.
In November 2015, Homeshop18 withdrew its $75 million IPO application to list on the New York Stock Exchange, a few months after parent company Network18 was acquired by Reliance Industries Limited. Around the same time, Network18 had said that “Homeshop18 has strategically scaled down its digital home shopping business to leverage the potential in the TV home shopping segment, which it dominates with its innovative initiatives.”
Den Snapdeal TV Shop: Online marketplace Snapdeal and cable & broadband operator DEN Networks had launched a TV shopping channel called Den Snapdeal TV Shop in January 2015. A little over two years later, in June this year, both companies sold 100% stake in the TV shopping channel to Pimex Broadcast Private Limited.
HomeShop18’s performance in Q1 FY18
Network18 said that growth of its broadcasting segment was partially offset by continued weakness in its TV shopping business, even though losses in the TV shopping business lowered. HomeShop18, the TV shopping business, continued to face challenges due to decline cash-on-delivery payments post demonetization, and “stiff competition from ecommerce”. The GST rollout, the company said, is positive for HomeShop18, since it will eliminate the issue of state entry taxes. “Management is keeping a tight leash on costs, and taking steps to revive the business.”