Spark Networks, owner of JDate, Christian Mingle, as well as other dating sites, is facing an intense activist campaign because of the hedge investment Osmium Partners, that will be seeking to unseat the board and force a purchase for the company that is troubled view web site.
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 have 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 in a few days, sources knowledgeable about the problem stated, allowing the activist hedge investment to assume 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 targeted at 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 general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing exactly just exactly what it claims are Spark’s bad business governance, payment issues, and stock price that is declining. The hedge fund additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and that its networks that are christian been underperforming in accordance with their online dating sites peers.
The market and shareholders may actually have fallen out from love with “LOV. at a per share price of approximately $5, a almost 50% decrease within just per year” As Osmium waits to see whether voters will think its four board nominees really are a match, listed here is a glance at a few of the hedge investment’s other gripes with Spark, predicated 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 side Christian Mingle, has taken into account 95percent associated with 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, as well as its Chairman and CEO Greg Liberman also conceded for this failure on its very first quarter 2014 earnings call, where it reported its slowest customer figures since 2006.
In addition, the marketing regarding the JDate rebranding, as well as Christian Mingle, has fallen brief and also the organization’s shelling out for these endeavors has received serious repercussions, based on Osmium.
“Spark’s ‘media strategy’ can be an unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium published with its presentation. “These distractions outside of the scalable core business have actually resulted in $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 remain competitive through the development of “add-ons,” or features beyond the original dating internet site solutions of profile creation and use of a database. The hedge funded cited HowAboutWe for partners and “featured profiles” on OKCupid and eHarmony as types of brand name add-ons which have strengthened profitability at these websites.
Management that is “pleased” with bad results.
Despite profits misses and a decreasing stock price, 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 telephone phone calls explaining the business’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 — 30% associated with the economy limit.”
Spark administration can be perhaps not placing its cash where its lips occurs when it comes down to spending within the business.
“Management and Board have actually restricted money in danger in outright stock ownership,” Osmium claimed. “Excluding investment they received at no real expense to on their own, administration additionally the Board collectively possess just 0.2percent of this business.”
Mariah Summers is a continuing company reporter for BuzzFeed Information and it is situated in ny. Summers reports on hospitality, travel and estate that is real.