Home Shopping Network 2010 Annual Report Download - page 6

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Table of Contents
HSNi is committed to providing an evolving variety and mix of quality products at reasonable prices and from brands that resonate with its
customers. Products offered through HSN include jewelry, fashion (apparel & accessories), beauty & wellness, and home & other (including
housewares, home fashions, electronics, fitness and other). Featured products include proprietary label products and third party-branded
products, some of which are produced exclusively for HSN, as well as merchandise generally available through other retailers. Cornerstone
primarily offers home and outdoor furnishings and casual and leisure apparel with the majority produced exclusively for Cornerstone.
HSN
Overview
HSN includes the HSN television networks; its related website, HSN.com; and a limited number of outlet stores. The HSN television
network broadcasts live, customer interactive television home shopping programming 24 hours a day, seven days a week. This programming is
intended to promote sales and customer loyalty through a combination of product quality, value and selection, coupled with product information
and entertainment. Programming is divided into separately televised segments, each of which has a host who presents and conveys information
regarding featured products, sometimes with the assistance of a representative from the product vendor or someone that we retain to aid in the
sale of the goods. HSN.com is a business-to-consumer internet commerce site that sells all of the merchandise offered on the HSN television
networks, together with complementary products and select merchandise sold exclusively on HSN.com. The HSN strategy continues to focus on
defining a clear and differentiated brand and creating an identity for itself as a lifestyle, editorial, programmed commerce network that provides
great products with innovative and engaging presentations.
Reach
HSN produces live programming for the HSN television network from its studios in St. Petersburg, Florida, and distributes this
programming by means of satellite uplink facilities, which it owns and operates, to two transponders (one for the high definition feed and the
other for the standard definition feed) on the same satellite. HSN2, a network that primarily distributes taped programming on a limited
distribution basis, debuted in August, 2010. The satellite transponders are leased on a full-time basis; one satellite transponder is leased through
January 2012 and the other is leased through May 2019. Each satellite transponder lease provides for continued carriage of the HSN television
networks on a replacement transponder and/or replacement satellite, as applicable, in the event of a failure of the transponder and/or satellite.
HSN has also designed business continuity and disaster recovery plans to ensure its continued satellite transmission capability on a temporary
basis in the event of inclement weather or a natural or other disaster.
As of December 31, 2010 and 2009, the HSN television networks reached approximately 95.9 million and 94.4 million homes,
respectively, of the approximately 115.9 million and 114.9 million homes, respectively, in the United States with a television set. Television
households reached by the HSN television networks as of December 31, 2010 and 2009 primarily include approximately 65.5 million and
64.6 million households capable of receiving cable and/or broadcast transmissions, respectively, and approximately 30.4 million and
29.8 million direct broadcast satellite system, or DBS, households, respectively.
Pay Television Distribution
HSN has entered into multi-year distribution and affiliation agreements with cable television and DBS operators, collectively referred to in
this document as pay television operators, in the United States to carry the HSN television networks, as well as to promote the networks by
carrying related commercials and distributing related marketing materials to their respective subscriber bases. HSN currently has contracts with
many local and national pay television operators to distribute HSN television programming. Some of HSN’s larger pay television operators
include Comcast, DirecTV, Echostar/DISH and Time Warner. HSN television network sales from customers residing in households that
subscribed to these larger pay television operators accounted for approximately 27% of HSNi’s annual revenue in 2010.
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