Infomercial King Sells Company, Ronco Goes Public for Expansion

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Ron Popeil, the storied television pitchman who has peddled vegetable choppers and tabletop rotisserie ovens with the persuasiveness of a modern-day P.T. Barnum, has decided to sell his company not for $20 million, or $30 million or even $50 million.


He has sold out for the amazing price of $56.5 million.


But wait, there’s more!


The company, Chatsworth-based Ronco Corp., has also gone public and is set to expand.


“I ran the business like an entrepreneur, not like a businessman,” Popeil said. “I had about 170 employees, but I never really got involved. I hate the day-to-day stuff.”


Popeil’s inventions and infomercials have become such a part of pop culture that the Smithsonian Institution placed one of his most famous products, the Veg-O-Matic, in its collection of artifacts of American life. But now, at 70, he wants to spend more time with his two young daughters, aged 3 and 5 & #733; (he has three adult daughters from previous marriages).


The new company plans to develop more products, bring Popeil’s brand into more retail stores, reach into ethnic markets and expand online sales all avenues that other direct sales companies have taken in recent years.


Popeil will consult on inventions and continue to appear in television spots. His deal includes a three-year consulting agreement that will pay him $500,000 a year and a percentage of gross profits for products he promotes. Additionally, he will receive $10,000 for every guest appearance on TV or at a retailer, $50,000 for every infomercial produced and $50,000 for each appearance on Home & Garden Television, according to the company’s prospectus.


“Ron tests all his products in his home. His kitchen is his own lab,” said Gilbert Azafrani, the company’s general counsel. “Every time I’ve been to his house, for every meeting, he’s cooking and wants you to taste something. He’s constantly inventing and testing some kind of spatula or utensil.”



In his blood


Popeil became a salesman as a teenager, hawking kitchen products that his father had invented. He developed his demonstration techniques at a Woolworth’s in Chicago.


Popeil skipped college and after some success selling in department stores and on state and county fair circuits, he moved to television in the 1950s. He produced his first 60-second commercial for $500 for the Ronco Spray Gun, a garden hose attachment invented by his father.


In 1964, he started his own company, Ronco Corp., and sold the Chop-O-Matic and Veg-O-Matic, two kitchen utensils invented by his father, exclusively on television. He went on to invent some 30 different products, including the Pocket Fisherman, a folding fishing pole, in 1972.


But Popeil has had his share of failures. In 1987, he filed for bankruptcy, blaming his bank that he said had been in financial trouble. The bank demanded payment on debt by taking control of Ronco’s assets. Popeil had to buy back his assets for $2 million.


In 1998, he came up with his most successful product ever: the Showtime Rotisserie & BBQ. His infomercials for the product punctuated by the “set it and forget it” tagline became a sensation. All told, the company estimates that it has sold more than $750 million worth of the ovens.


In 2003, he was approached by Richard Allen, a former marketing, brand management and manufacturing executive for companies that included Milliken & Co. and Polo Ralph Lauren Corp.


Allen was shopping for an import company to acquire for a group of private investors and had heard that Popeil was looking to sell out. (Allen had bought a Showtime Rotisserie himself several years earlier).


This year, he hired Sanders Morris Harris Group Inc., a Houston, Texas-based investment bank, to raise $50 million of private equity capital from individuals and institutional investors for preferred private stock.


The transaction had Ronco Marketing Corp. acquiring the assets of Popeil’s privately held companies for $56.5 million. Ronco Marketing then merged with a public shell company and changed its name to Ronco Corp. Allen stayed on as chief executive.


Dave Stewart, a professor of marketing at USC’s Marshall School of Business, said the generous consulting deal reflects how reliant the company remains on Popeil. “In the long term, the company will have to think about other ways to sell, but in the short term, as long as he continues to be salesperson of their products, I think they’ll do well,” he said.



A changed industry


The kind of direct sales Popeil pioneered still appear on late-night television, generating an estimated $296 billion last year, according to the Electronic Retailing Association. But it’s a new game compared with 20 years ago, when good spots could be produced for $10,000. Now the slickly produced infomercials cost anywhere from $200,000 to $1 million.


Nearly 60 percent of Ronco’s product sales currently come from direct response infomercials, with only 25 percent from traditional retailers. Ronco wants to alter that ratio.


“We need to take advantage of around $300 million we’ve spent on media just on the Showtime Rotisserie over the years,” Popeil said. “All that media was used to generate sales directly, but it can also function as advertising, so we can capture retail accounts at places like Wal-Mart,” he said.


Ronco also plans to tap the Hispanic audience that is largely untouched by direct response infomercials (Popeil’s spots had been dubbed in the past). New infomercials are being produced in Spanish that will feature Popeil with celebrities of Latin American TV, although Popeil doesn’t speak Spanish.


Meantime, Popeil continues to invent new kitchen products, including a turkey fryer due out next year.


“There’s a huge need. About 20 million people down south fry turkeys every year in the most dangerous way in the world. People get burned and houses burn down,” he said. “So I’m making a fryer that can cook a 20 pound turkey in an hour and 10 minutes indoors.”


But wait. There’s still more.


Popeil has become obsessed with developing an indoor smoker. “I love smoking the fish I catch,” he explained. “There’s no effective design to smoke indoors without stinking up your house. But it’s a very difficult invention, and I haven’t solved all the problems. It’s quite a riddle.”

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