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Home Shopping Network Is Sued by Shareholder

December 29, 1992|From Bloomberg Business News

TAMPA — Home Shopping Network Inc. and its chairman, Roy Speer, have been sued by a shareholder alleging that Speer has improperly paid his own son at least $7.8 million in company funds.

The suit, filed in federal court in Tampa, said the television retailer has been paying Richard Speer of Western Hemisphere Sales Inc., even though the computer-services agreement between the two companies expired in mid-1988.

The payments "constitute a waste and spoliation of HSN's assets," said the suit, filed by 7457 Corp. of Denver. The payments "lack any legitimate business purpose and are, in essence, a means by which defendant Speer improperly provides funds for members of his family," it said.

The Dec. 15 suit also named the company's chief financial officer and six directors, who it accused of a "reckless or grossly negligent failure" to keep informed of company affairs.

Home Shopping, a St. Petersburg, Fla., company controlled by Roy Speer, wouldn't comment on the suit. A Speer-run partnership agreed early this month to sell its 80% voting stake in the company to Liberty Media Corp. for $60 million and 4 million new shares. Roy Speer would remain as chairman through March, 1994.

The 7457 Corp., whose sole shareholder is Steven M. Mizel, is a corporate general partner of a limited partnership, said Joel Feffer, its attorney. It owns less than 5% of Home Shopping's stock, though Feffer wouldn't say exactly how much.

Home Shopping, which owns 12 UHF television stations that sell consumer products on the air, agreed in 1985 to pay Pioneer Data Inc., now Western Hemisphere Sales, 1% of its gross profit for three years, the suit said. In return, it was to receive "computer advice," the complaint said.

The company paid Speer's son $3.3 million and $3.5 million in fiscal years 1991 and 1992 as part of the expired agreement, the suit said.

The company also allegedly has been giving him more than $1 million a year to sell merchandise that Home Shopping can't sell itself. Speer's son, the sole shareholder of Western, receives a 15% commission for such sales, though he is under no obligation to sell at the highest possible price, the suit said.

PaineWebber wrote in October that the agreement between the network and Speer's son lasts forever and is worth about $30 million.

"To make amends with shareholders," PaineWebber wrote, "the best thing the Speers could do would be to simply terminate the contract without making any further payments. Pioneer has already been richly compensated."

PaineWebber rated Home Shopping shares unattractive.

Home Shopping shares were down 1/8 to 8 1/4 in recent trading on volume of 285,400 shares. Shares have nearly doubled since Nov. 17, when they sank to a 52-week low of 4 1/4.

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