Spark Networks, owner of JDate, Christian Mingle, along with other dating sites, is facing a tough activist campaign by the hedge investment Osmium Partners, that is trying to unseat the board and force a purchase of this company that is troubled.
Then Spark Networks, owner of JDate, Christian Mingle, and a handful of other niche dating sites, is about to get its heart broken if love is a battlefield.
Osmium Partners is practically certain to win the four board seats it is gunning for when Spark holds its yearly shareholder conference a few weeks, sources acquainted with the problem stated, allowing the activist hedge investment to take close control and force a purchase associated with company. Originally planned for June 17, Spark has recently delayed the yearly conference until June 28, a move these sources stated is geared towards purchasing 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 representative for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s general general public filings.
Osmium, which has 15% of Spark, established its proxy battle in December 2013, citing just what it claims are Spark’s poor business governance, payment issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and that its Christian companies have actually been underperforming in accordance with their internet dating peers.
At a per share price of around $5, a almost 50% decrease in under per year, the marketplace and shareholders seem to have fallen out from love with “LOV.” As Osmium waits to see whether voters will think its four board nominees are really a match, listed here is a review of a few of the hedge investment’s other gripes with Spark, according to a presentation it offered to investors in May:
Too little rebranding and bad online strategy.
Osmium stated in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent for the business’s income since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s first quarter, as well as its Chairman and CEO Greg Liberman also conceded for this failure on its very very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising for the JDate rebranding, as well as for Christian Mingle, has fallen quick plus the business’s paying for these endeavors has received repercussions that are dire in accordance with Osmium.
“Spark’s ‘media strategy’ is a unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium penned with its presentation. “These distractions outside of the scalable core company have actually generated $29.4 million in fixed overhead supported by simply $69 million in income. This has lead to Spark revenue that is generating worker this is certainly 71% less than rivals Match.com, eHarmony and Zoosk.”
Failure to innovate.
Osmium additionally claims that Spark has neglected to innovate and stay competitive through the development of “add-ons,” or features beyond the standard dating site services of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on OKCupid and eHarmony as samples of brand name add-ons which have strengthened profitability at these websites.
Management this is certainly “pleased” with bad outcomes.
Despite profits misses and a stock that is declining, Osmium contends that Spark’s administration is delusional in terms of the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits telephone phone phone calls explaining the company’s outcomes throughout the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the organization has created over $32 million in net LOSSES вЂ” 30% of this market limit.”
Spark administration is also perhaps not placing its cash where its lips is whenever it comes down to spending into the business.
“Management and Board don’t have a lot of money at an increased risk in outright stock ownership,” Osmium reported. “Excluding commodity they received at no true expense to by themselves, administration therefore the Board collectively obtain just 0.2percent of this business.”
Mariah Summers is really a continuing company reporter for BuzzFeed Information and it is located in ny. Summers reports on hospitality, travel and estate that is real.