Long before Amazon and Alibaba, there were home shopping channels on television.

Today, in the modern age of digital commerce, those “home shopping” channels are hoping that a steady video stream of celebrity endorsers and effervescent hosts will save — and even grow — their niche in retail TV and online retailing.

While Amazon gobbles market share from online and big-box retailers of every shape and size, TV home-shopping channels have managed to maintain their hold on a multibillion-dollar share of the business, in part with new technology and digital strategies.

Related: Next-Generation TV Expected To Usher in New Era of T-Commerce

Last month, the industry got a bit of a boost with the pending merger of its two largest companies, QVC and HSN. That deal, expected to close in the fourth quarter, is either a testament to the power of TV home shopping or an attempt to buy a little more time for a struggling sector.

On the surface, the QVC and HSN deal, valued at about $2.6 billion, does a little of both. The combination would create a potential powerhouse with $14 billion in annual sales and annual cost savings of $75 million to $110 million per year. It will also pair the two giants in the space, with diverse product lines: QVC has focused on home and accessories products, while HSN has concentrated on young women’s fashions.

QVC is in more TV homes — 104 million versus HSN’s 84 million — but HSN has a stronger online and mobile presence. Forty-three percent of HSN’s $2 billion in online sales are mobile.

Bulking Up Against Amazon
The added heft could help insulate the companies from the looming threat of online retail behemoth Amazon, which is expected to report online retail sales of more than $107 billion this year.

“Everybody’s always worried about Amazon, just because of how big it’s gotten and generational shifts,” FBN Securities managing director, cable media and entertainment equity research Robert Routh said in an interview. “People in my generation may or may not have wives or girlfriends that watch QVC, while millennials, they don’t even watch television.”

The biggest question is whether companies still involved in the sector have enough exclusive products, personalities and other assets that will overshadow any losses on the TV side, Routh added. “At some point it could face material issues to its core viewership unless it can find a way to adapt,” he said. “But so far it has.”

While TV shopping may have passed its heyday — sales for both QVC and HSN have dipped over the past year — companies in the sector see video as one of the differentiating factors that won’t just keep TV shopping alive, but help it thrive.

“If anyone says they’re not concerned about Amazon, then they don’t have their eyes wide open,” Jewelry TV chief strategy officer Tim Engle said in an interview.

Engle said while the deal could affect other retailers that offer similar products, Jewelry TV made the decision in the early 2000s to focus exclusively on one product — jewelry.

“We feel like that niche and that focus really positions us well and defines who we are,” Engle said. “I’m not like the No. 3 person trying to compete with these two mega-giants. I’m the No. 1 person in my space.”

QVC and HSN have also made changes over the years, switching their product focus from electronics and watches several years ago to a concentration on home products for QVC and women’s fashions for HSN.

Both channels have a steady stream of celebrity endorsed offerings, from Lisa Rinna and Isaac Mizrahi fashions at QVC to Diane Gilman jeans and Keith Urban guitars at HSN.

And both have plunged headfirst into the information age with mobile and e-commerce capabilities. At QVC, e-commerce accounted for $4 billion of global revenue in 2016 and represented 9% of consolidated global revenues and 55% of U.S. revenues in the second quarter, with mobile making up 63% of global e-commerce orders and 62% of U.S. e-commerce orders.

According to HSN, about 43% of its $2 billion in annual digital sales are from mobile.

Both QVC and HSN have a strong presence on TV. QVC’s three pay TV channels are in 104 million homes and HSN’s two channels are in 91 million households. Both brands have a strong relationship with major cable operators such as Comcast, Charter Communications and Cox Communications, as well as with smaller systems throughout the country.

Both channels also have been active adopters of new technologies. HSN is available on Roku, Apple TV, Android TV, You Tube, Smart TVs and Amazon Fire TV, while QVC is on Facebook Live, Apple TV, YouTube and Roku.

While QVC and HSN grab most of the TV home-shopping headlines, smaller outlets such as Evine Live (formerly ShopHQ), Jewelry TV, Shop LC, America’s Auction Network, Gem Shopping Network and others have managed to weather the changes as the business has evolved.

Rolling With the Changes
Some have managed the changes better than others.

Privately held Jewelry TV has had double-digit sales growth in the past two years; it grew by 14% in 2016 and by 15.7% in 2015, far outpacing overall retail industry growth rates of about 3.4%, according to the National Retail Federation.

Compared to Amazon, Jewelry TV and TV home shopping in general is tiny. But Engle sees that as an advantage, too.

“People still want some humanity in their retail,” Engle said. “I think there is a place for Amazon, I think there is a place for Macy’s, I think there is a place for all the retailers, but I also think there is a viable place for selling on video. Video is where the industry is moving anyway; we’ve just been doing it for 25 years.”

While every shopping channel has an eye on Amazon, Routh of FBN Securities said, there is room for the e-retailer and the channels to survive. “There is still a huge percentage of the population that stays at home and tends to watch channels like QVC and HSN as they’re doing other things,” Routh said.

Amazon made its name in books, movies and music, but has been steadily encroaching on other industries as it strives to dominate the retail sector. Last year, it became the largest online seller of clothing, racking up $16.3 billion in apparel sales in 2015, according to Internet Retailer. And the online giant is closing the gap between itself and big-box retailers like Walmart, with $24 billion of total sales in 2015, and Macy’s, with $21 billion, Internet Retailer reported.

Amazon has reportedly investigated launching its own shopping channel, a “QVC Killer,” according to tech site Geek Wire, which would allow purchases right from the screen. Amazon already has incorporated e-commerce features to its Amazon Fire Stick, allowing customers to purchase some items. And HSN signed a deal in 2016 to incorporate its Shop By Remote app on the Fire Stick and the app also is available on Android TV.

“We bring an experiential aspect and an engaging aspect, where I can sell a chrome dioxide ring and explain why chrome is so unique, what’s the story behind chrome, where in Russia is it mined, why is it so unique and why it is better to buy this than maybe an emerald,” Engle said. “You can’t get that behind the counter at a Zales or a Macy’s and you certainly are never going to get it from Amazon. That’s not where Amazon plays.”

Still, there’s little dispute that the TV home-shopping business is under pressure. QVC, long the sector’s undisputed king, saw its U.S. revenue dip 3.2% in 2016 to $6.3 billion, while overall sales stayed flat at $8.7 billion. In the second quarter, sales fell 4% to $1.97 billion from $2.1 billion in the previous year.

“It is a tough environment; we’re not here to suggest that the environment is going to suddenly get easier,” QVC CEO Mike George said on a July conference call announcing the deal. “And so, certainly the sales headwinds are a reality for retailers.”

At HSN, net sales fell 2.7% in 2016 to $3.6 billion, and the slide continued in the first half of 2017, with overall revenue declining 5.9% to $1.6 billion.

“[I]t has been a tough period; we’re not happy with the performance,” HSN CEO Rod Little said on the July call. “It’s part of why we’re here today, I guess.”

HSN expects the market to begin turning around in the second quarter, when efforts to cut costs and the divestiture of some smaller apparel lines kicks in.

“And then it’s all about leveraging the capabilities; digital, social, some of the platform e-commerce elements that QVC has and taking the best of both mindsets, what they’re good at, what we’re good at, and getting after some of those very quickly,” Little said.

Home shopping networks have largely stayed out of the battles between pay TV programmers and distributors for good reason. The channels are offered for free and distributors also get a cut of sales generated in their markets. At HSN, that has meant that pay TV providers have received a 10% slice of their nearly $4 billion in annual sales, while QVC shares up to 5% of its $6.5 billion in U.S. revenue. Those percentages will be modified after the deal closes in the fourth quarter, but isn’t expected to be a dramatic reduction in the overall pie.

Some operators have said the deal will force a re-evaluation of the QVC and HSN networks, which include QVC2, Beauty iQ and HSN2, in addition to the main QVC and HSN channels.

“They do pay us, but it’s not a huge amount of money,” said one midsize distributor who asked not to be named, adding that the merger could be an opportunity to reduce the number of QVC-HSN channels carried, which could then be used for broadband or for other content.

“Their second and third channels really don’t have the same value,” the midsize distributor said. “[The merger] makes it a little easier to push back.”

George, who will manage both companies when the deal is closed, said on the conference call that he understands that the combined companies’ five channels have varying degrees of distributor interest, with different channel positions, carriage structures and even some still broadcasting in standard definition.

“We’ve always believed in that, as a core principle at QVC, that our distributors should win when we’re winning,” George said on the call. “And so, we want to engage with them on what would that look like and what would make sense for all parties.”

If you can’t beat ’em, buy ’em.

With the two major distribution mergers of the past year — Charter Communications-Time Warner Cable and Cablevision Systems-Altice N.V. — heading for the finish line, some analysts wonder if content could be the next beehive of activity on the deal front.

Greasing the speculation wheels: Comcast’s $3.8 billion pact to buy DreamWorks Animation, which some believe could encourage other TV distributors to take a harder look at the programming space.

The DreamWorks Animation deal could shed new light on programming targets, BTIG media analyst Brandon Ross said in a blog post, especially as distributors look for new ways to differentiate themselves from the growing list of over-the-top providers. DreamWorks was just the first in what could be a series of content deals, Ross said.

SUITORS FOR PARAMOUNT STAKE

Viacom has said it has more than a dozen potential suitors for the planned sale of a minority interest in movie studio Paramount. And talk heated up in April that mixed martial arts content provider Ultimate Fighting Championship was for sale. Reports in the MMA industry press said UFC could be worth as much as $6 billion.

Ross said the potential jewel in the content heap could be World Wrestling Entertainment, the scripted sports entertainment juggernaut headed by Vince McMahon. While neither WWE nor McMahon has even hinted at being interested in a sale, Ross said the time could be right to give some serious thought to it.

WWE makes sense for a strategic buyer on several fronts. Its content is popular with young viewers (Monday Night Raw is a consistent ratings draw for USA Network), it has a strong digital presence with the over-the-top WWE Network and, at a total valuation of about $1.3 billion, it’s digestible for larger players.

Comcast’s willingness to pay a premium for DreamWorks Animation — about 20 times cash flow — to basically take out controlling shareholder and CEO Jeffrey Katzenberg indicates it might be willing to act similarly with McMahon.

Keeping Vince McMahon around would be critical to any deal with WWE, Ross said. A strategic investment might be the best way to make a deal happen.

FBN Securities cable, satellite and entertainment managing director Robert Routh thinks the chances the McMahons would sell are slim. Besides, he said, content-hungry distributors have several other potential targets.

Routh does not think the Comcast-DreamWorks deal will necessarily lead to more content acquisitions by Comcast: federal regulators would probably prevent that. And with NBCUniversal already in the fold, Comcast probably doesn’t need more content.

Pairing content and distribution used to be more commonplace. For example, Time Warner Inc. owned both Time Warner Cable and Turner Broadcasting Systems and Tele-Communications Inc. was paired with Liberty Media. Those companies and their successors eventually split programming and distribution assets after synergies became less apparent.

“It’s kind of like Back to the Future,” Routh said. “Distributors are starting to say that owning content with distribution, under the right conditions, can make a ton of sense, especially if it’s highly focused content.”

CHART: Back to the Future

Pay TV operators, once keen on divesting programming assets from their distribution business, may be looking at adding content to the mix as they seek to further differentiate themselves from OTT competitors. Here are a few possible candidates for consolidation.

Company                       Market Cap                                                   Top Content

Starz . . . . . . . . . . . . . . .$2.67 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . Starz, Encore

Scripps Networks . . . . . $7.87 billion . . . . . . . . . . . . . . . . . . . . . HGTV, Food Network

Viacom . . . . . . . . . . . . . $16.5 billion . . . . . . . . . MTV, Comedy Central, Nickelodeon

AMC Networks . . . . . . . $4.6 billion . . . . . . . . AMC, IFC, WE tv, BBCA, SundanceTV

MGM . . . . . . . . . . . . . . . $3.5 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . thisTV, EPIX

WWE . . . . . . . . . . . . . . . $1.27 billion . . . . . . . . . . . . . . . . . . . . . . . . . . WWE Network

Lionsgate . . . . . . . . . . . $3.26 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EPIX

DHX Media . . . . . . . . . $762.6 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . SuperWhy!

RLJ Entertainment . . .  $8.06 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Acorn TV

SOURCES: FDM Securities, Dow Jones, Multichannel News estimates