Spark Networks, owner of JDate, Christian Mingle, along with 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 associated with 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 specific to win the four board seats it is gunning for when Spark holds its annual shareholder conference in a few days, sources acquainted with the problem stated, allowing the activist hedge fund to take close control and force a purchase associated with business. Initially planned for June 17, Spark has recently delayed the meeting that is annual June 28, a move these sources stated is targeted at 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 agent for Spark, which trades beneath the “LOV” stock ticker, declined to comment beyond citing the company’s general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just just what it claims are Spark’s bad business governance, settlement issues, and stock price that is declining. The hedge investment additionally alleges that Spark has mismanaged JDate, cougarlife its “crown jewel,” and therefore its networks that are christian been underperforming in accordance with their internet dating peers.
The market and shareholders may actually have fallen out from love with “LOV. at a per share price of around $5, a almost 50% decline in under per year” As Osmium waits to see whether voters will think its four board nominees are really a match, listed here is a glance at a number of the hedge investment’s other gripes with Spark, according to a presentation it offered to investors in might:
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 of this 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 even conceded to the failure on its very very very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition to this, the advertising associated with JDate rebranding, as well as for Christian Mingle, has fallen brief while the business’s paying for these endeavors has already established repercussions that are dire in accordance with Osmium.
“Spark’s ‘media strategy’ can be a unverified and immaterial distraction from the business’s core, high-margin premium dating business,” Osmium had written with 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 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 standard 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 samples of brand name add-ons which have strengthened profitability at these websites.
Management this is certainly “pleased” with poor outcomes.
Despite profits misses and a stock that is declining, Osmium contends that Spark’s administration is delusional with regards to the company’s financials.
“We think Mr. Liberman has used your message ‘pleased’ no fewer than 20 times on profits telephone telephone phone calls explaining the business’s outcomes during 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% regarding the market limit.”
Spark administration can be maybe maybe maybe not placing its cash where its lips occurs when it comes to spending when you look at the business.
“Management and Board have actually restricted money at an increased risk in outright stock ownership,” Osmium reported. “Excluding investment they received at no real price to by themselves, administration additionally the Board collectively obtain just 0.2percent for the business.”
Mariah Summers is really a continuing company reporter for BuzzFeed Information and it is situated in brand new York. Summers reports on hospitality, travel and property.