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QVC and HSN Can Link Up, But They'll Still Have to Contend With Amazon

Liberty Interactive (QVCA) finally scooped up rival home-shopping TV platform HSN Inc. (HSNI) in a deal announced this morning, but that was the easy part. The combined company still has to figure out a way to compete with the behemoth that is (AMZN) .

Englewood, Colo.-based Liberty Interactive, the parent company of shopping channel QVC, already owned 38% of HSNi but is now acquiring the remaining 61.8% of the company for $2.1 billion. Later in 2017, Liberty is planning to spin off the businesses into a separate company called QVC Group, which will include HSNi and Zulily, an online clothing store that Liberty acquired in 2015.

Company executives said in a conference call announcing the deal on Thursday morning that it should help them better compete in a market that continues to move online. "The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment," said Liberty Interactive CEO Greg Maffei.

Both companies' sales have declined in recent years due to the rise of online shopping. Thirty-year-old QVC's revenue for the 2016 fourth quarter fell 3.1% year-over-year to $3.13 billion. And forty-year-old HSN saw its revenue fall 4% year-over-year for the 2017 first quarter to $785.4 million.

While retailers partially blamed uncertainty around Brexit and the U.S. election for declining sales in 2016, the main culprit is still U.S. e-commerce giant Amazon, said Budd Margolis, a TV shopping consultant based in London. The company did $135.99 billion in sales last year.

"Amazon is starting to get its feet in every nook and cranny," he said. Last month, Amazon moved into the supermarket industry with its acquisition of upscale grocer Whole Foods (WFM) and on Thursday morning Amazon announced that it will now sell...