Spark Networks, owner of JDate, Christian Mingle, along with other dating web sites, is dealing with a tough activist campaign by the hedge investment Osmium Partners, which will be trying to unseat the board and force a purchase regarding the 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 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 close control and force a sale regarding the 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 longer to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing unique buyout offer.
A agent for Spark, which trades beneath the “LOV” stock ticker, declined to comment beyond citing the business’s general general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing exactly 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 networks that are christian been underperforming in accordance with their online dating sites peers.
The market and shareholders seem to have actually fallen out from love with “LOV. at a per share price of around $5, a almost 50% decrease in under a year” As Osmium waits to see whether voters will think its four board nominees are really 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 bad online marketing strategy.
Osmium stated with its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent associated with the organization’s income since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s very first quarter, as well as its Chairman and CEO Greg Liberman also conceded to the failure on its very first quarter 2014 earnings call, where it reported its slowest customer figures since 2006.
In addition, the advertising regarding the JDate rebranding, as well as for Christian Mingle, has cougarlife fallen brief plus the organization’s shelling out for these endeavors has received serious repercussions, in accordance with Osmium.
“Spark’s ‘media strategy’ can be a unverified and immaterial distraction from the business’s core, high-margin premium dating company,” Osmium composed with its presentation. “These interruptions beyond your scalable core company have resulted in $29.4 million in fixed overhead supported by simply $69 million in income. This has led to Spark revenue that is generating worker that is 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 creation of “add-ons,” or features beyond the original 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 profitability at these websites.
Management this is certainly “pleased” with bad results.
Despite profits misses and a decreasing stock price, Osmium contends that Spark’s administration is delusional in terms of the business’s financials.
“We think Mr. Liberman has utilized the word ‘pleased’ no fewer than 20 times on profits phone phone phone calls explaining the company’s outcomes during the last eight quarters,” Osmium’s presentation states. “Over this time around duration, the business has created over $32 million in net LOSSES вЂ” 30% associated with economy limit.”
Spark administration normally maybe maybe not putting its cash where its lips is whenever it comes down to spending when you look at the business.
“Management and Board don’t have a lot of capital at risk in outright stock ownership,” Osmium reported. “Excluding investment they received at no real price to by themselves, administration additionally the Board collectively have just 0.2percent of this business.”
Mariah Summers is company reporter for BuzzFeed Information and it is situated in ny. Summers reports on hospitality, travel and estate that is real.