Monday, September 17, 2007

Ron Popeil's Comeback Spirit
Sets Stage for Greatest Sale

Master of the Showtime rotisserie, Veg-O-Matic, Electric Food Dehydrator and Pocket Fisherman, TV fixture Ron Popeil has been variously described as an industrial design genius and TV sales huckster, and as Salesman of the Century (his 1995 autobiography) and truth is, he is some of each. He creates unusual products, and then convinces you that you need them – even though you had no inkling of a need before encountering Ron and one of his TV infomercials.

Popeil also attained TV icon status via a parody by Dan Aykroyd, (the Super Bass-O-Matic pitchman, 1976) on an early Saturday Night Live episode.

But Popeil is one other thing as well: a master of the comeback.

Riding his early successes, his Ronco Corporation (founded 1964, went public 1969) was sailing along selling things like the Miracle Broom, Miracle Brush, the Roller Measure, the Salad Spinner, the Glass Froster, the Cookie Machine, Inside the Egg Scrambler and the Smokeless Ashtray. Carrying a heavy advertising tab, some years were profitable ($1.4 million, 1978), and some weren’t (loss $796,000, 1973).

Ron reached a bit far when introducing his Clean-Aire machine in the late 1970s. His competitors were now the likes of Norelco, Remington, and other top housewares makers. A price war ensured, and Ronco cut advertising in response to save dollars. When advertising dropped, so did sales, by one-third from 1982 to 1983. At the same time, Ronco’s bank called in their $15 million revolving credit line. Ronco couldn’t pay it, declared bankruptcy and went out of business (1984).

That was the company, not Ron, however. Ron still had his personal fortune, and bought back the better part of Ronco’s inventory at auction. With a new partner, he resumed business. But the partnership failed, and Popeil ws left with a huge inventory of food dehyrators, and other items.

What did he do?

The famous TV pitchman humbled himself and went back to the county fair circuit where he worked his magic, face-to-face with crowds of prospects and customers, and sold, sold, sold (1987 to 1990).

He teamed with Fingerhut briefly, which was developing a TV shopping channel. That didn’t last, but Popeil’s interest in TV sales was re-ignited and that did. He produced his first half-hour infomercial (1991). It was a recapture of his county fair spiel, in essence, and featured his food dehydrator. It was a success: he sold some $80 million of product by 1993. Then came the GLH (“great looking hair”) Formula #9, and the Popeil Automatic Pasta Maker.

His greatest triumph lay just ahead: the Ron Popeil Showtime Rotisserie and Barbecue (“set it and forget it.”) Popeil notched sales of $250 million in 1999 alone, spending an astonishing $50 in advertising to get it done.

Then an even bigger sale: that of Ronco itself, $55 million to Richard Allen, backed by Sanders Morris Harris Group Inc., a Texas investment bank (2005). Popeil got $40 million in cash, and $15 million in notes. He agreed to continue as company spokesman, at $50,000 per infomercial. A couple of name changes followed, plus a public offering, and the stock was soon trading as RNCP. The plan was to widen distribution, sell through big merchants like Walmart.

Didn’t work, however. Sales plunged from $90 million (year before the sale in June 2005) to $59 million (year after). Showtime Rotisserie was seven years old, and it seemed that everybody who wanted one had bought one. Infomercials were dated and new ones weren’t being made.

By 2007, the company was bankrupt. It was auctioned off for $6.5 million to a single bidder (August, 2007), Marlin Equity Partners, El Segundo, Calif., which secured the company's intellectual property and remaining inventory for the acquisition price.

In the aftermath, recriminations flew. Allen said the bank oversold the company and misrepresented the financial condition. Investment bank Sanders rejoined that Allen wasn’t a good CEO; he was being sued for some of his expenses as well.

The winner in all of it was Ron Popeil, largely because after his company went bankrupt in 1984, he was bold enough to purchase the assets and jump back into the ring and make a comeback. And then, after another setback, he was humble enough to step down from the airwaves and pitch his products face-to-face at county fairs until time and chance let him get back in touch with his mass audience.

How much is that kind of stamina worth? For Ron Popeil, something north of $40 million.

No comments: