Spark Networks, owner of JDate, Christian Mingle, as well as other dating sites, is dealing with an intense activist campaign by the hedge investment Osmium Partners, which can be seeking to unseat the board and force a purchase for the distressed business.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a small number of other niche online dating sites, is mostly about to obtain its heart broken.
Osmium Partners is nearly particular to win the four board seats it is gunning for when Spark holds its yearly shareholder conference week that is next sources knowledgeable about the specific situation stated, allowing the activist hedge investment to take solid control and force a purchase associated with the business. Initially planned for June 17, Spark has delayed the yearly conference until June 28, a move these sources stated is geared towards buying Spark additional time to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing its very own buyout offer.
A agent for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s general general public filings.
Osmium, which owns 15percent of Spark, established its proxy battle in December 2013, citing exactly exactly what it claims are Spark’s bad business governance, payment issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and therefore its Christian systems have actually been underperforming in accordance with their online dating sites peers.
At a per share price of around $5, a almost 50% decrease within just per year, the marketplace and investors may actually have fallen right out of love with “LOV.” As Osmium waits to see whether voters will think its four board nominees really are a match, here is a review of a number of the hedge investment’s other gripes with Spark, centered on a presentation it offered to investors in might:
Too little rebranding and marketing strategy that is poor.
Osmium stated with its presentation that Spark has neglected to rebrand JDate, which, along with Christian Mingle, has taken into account 95percent regarding the business’s income since its inception 17 years back. Spark just got around to rebranding JDate in this present year’s very very first quarter, and its particular Chairman and CEO Greg Liberman also conceded for this failure on its first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition to this, the advertising regarding the JDate rebranding, as well as for Christian Mingle, has fallen quick while the business’s shelling out for these endeavors has already established repercussions that are dire relating to Osmium.
“Spark’s ‘media strategy’ is a unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium published in its presentation. “These interruptions away from scalable core company have actually resulted in $29.4 million in fixed overhead supported by simply $69 million in revenue. This has led to Spark revenue that is generating worker that is 71% lower than competitors Match.com, eHarmony and Zoosk.”
Failure to innovate.
Osmium additionally claims that Spark has neglected to innovate and remain competitive through the development of “add-ons,” or features beyond the standard site that is dating of profile creation and usage of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on eHarmony and OKCupid as types of brand name add-ons which have strengthened useful reference profitability at these sites.
Management this is certainly “pleased” with bad outcomes.
Despite profits misses and a decreasing stock cost, Osmium contends that Spark’s management is delusional with regards to the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits telephone phone telephone calls explaining the business’s outcomes throughout the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the organization has produced over $32 million in net LOSSES вЂ” 30% associated with market cap.”
Spark administration is additionally maybe perhaps not placing its cash where its lips occurs when it comes down to spending into the business.
“Management and Board have actually restricted money at an increased risk in outright stock ownership,” Osmium stated. “Excluding commodity they received at no real price to by themselves, administration plus the Board collectively possess just 0.2percent associated with the business.”
Mariah Summers is really a continuing business reporter for BuzzFeed Information and it is based in ny. Summers states on hospitality, travel and estate that is real.