Spark Networks, owner of JDate, Christian Mingle, along with other dating internet sites, is dealing with a tough activist campaign by the hedge fund Osmium Partners, that is seeking to unseat the board and force a purchase regarding the difficult business.
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 solid control and force a purchase of this business. Initially planned for June 17, Spark has delayed the meeting that is annual June 28, a move these sources said is geared towards purchasing Spark additional time to rally shareholders to vote down Osmium’s proposal or preempt a forced sale by securing a unique buyout offer.
A agent for Spark, which trades underneath the “LOV” stock ticker, declined to comment beyond citing the business’s general public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just exactly 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, its “crown jewel,” and that its networks that are christian been underperforming in accordance with their online dating sites peers.
At a per share price of approximately $5, a almost 50% decrease in under per year, industry and investors seem to RussianBrides have fallen out from love with “LOV.” As Osmium waits to see whether voters will think its four board nominees are a match, listed here is a review of a number of the hedge investment’s other gripes with Spark, according to a presentation it provided to shareholders 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 accounted for 95percent associated with organization’s income since its inception 17 years back. Spark just got around to rebranding JDate in this present 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 marketing associated with JDate rebranding, as well as for Christian Mingle, has fallen quick additionally the organization’s paying for these endeavors has already established repercussions that are dire based on Osmium.
“Spark’s ‘media strategy’ is an unverified and immaterial distraction from the Company’s core, high-margin premium dating company,” Osmium had written with its presentation. “These interruptions 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 generating revenue per 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 development of “add-ons,” or features beyond the standard dating internet site solutions 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 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 phone calls explaining the business’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 — 30% of this market limit.”
Spark administration can also be maybe maybe perhaps not placing its cash where its lips occurs when it comes down to investing within 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 real expense to by themselves, administration additionally the Board collectively obtain just 0.2percent associated with the business.”
Mariah Summers is really a continuing company reporter for BuzzFeed Information and it is situated in nyc. Summers states on hospitality, travel and estate that is real.