A new leader has emerged in the home shopping industry. GS Home Shopping, which maintained its position as the leader of Korea’s home shopping industry for the last 10 years, was recently replaced by CJ Home Shopping.
According to the performance reports from the first half of 2006, CJ Home Shopping surpassed GS Home Shopping in operating income, net profit, and sales profit from TV infomercials.
CJ Home Shopping recorded KRW 390.1 billion of gross profit, KRW 128.4 billion of sales, KRW 21.1 billion of operating income, and KRW 18.8 billion of net profit during the first half of 2006. Gross profit and sales from the TV infomercials recorded KRW 262.8 billion and KRW 96.6 billion and exceeded those of GS Home Shopping, which were KRW 260.6 billion and KRW 96.0 billion, respectively.
Also, GS Home Shopping’s operating income and net profit were KRW 17.3 billion and KRW 13.4 billion and were quite short from what CJ achieved during the same period.
CJ Home Shopping is planning to achieve up to KRW 1,522,900 million of gross profit (except for sales from Mple Online) and KRW 85.0 billion of operating income, whereas GS Home Shopping is aiming at KRW 2.0 trillion of gross profit (including sales from GS e-Store) and KRW 77.0 billion of operating income. However, the industry anticipates that CJ will best GS this year.
The biggest reason is that CJ Home Shopping won the battle of SO (local cable service providers).
CJ Home Shopping has CJ Cable Net, a subsidiary company, through which it possesses 13 SOs, including CJ Cable Net Bukincheon, Dongbusan Broadcasting, Yangcheon Broadcasting, and Dream City Broadcasting. It is constantly purchasing and establishing new SO based on its abundant financial resources. On the other hand, GS Home Shopping only has two SOs : Korea Cable TV Ulsan Station and Gangnam Cable TV.
The unmatched numbers of SO and cable subscribers eventually resulted in the emergence of the new leader.
The greatest synergy of possessing SO for a home shopping company is the stable airing of programs, because SO has the right to arrange channels and programs.