Spark Networks, owner of JDate, Christian Mingle, as well as other dating internet sites, is dealing with a tough activist campaign because of the hedge investment Osmium Partners, that is trying to unseat the board and force a purchase associated with company that is troubled.
If love is really a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a small number of other niche internet dating sites, is approximately to obtain 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 a few weeks, sources acquainted with the problem said, allowing the activist hedge investment to seize control and force a purchase associated with business. Initially planned for June 17, Spark has recently delayed the yearly conference until June 28, a move these sources stated is directed at buying Spark more hours to rally investors 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 general general public filings.
Osmium, which owns 15percent of Spark, established its proxy battle in December 2013, citing exactly just what it claims are Spark’s bad business governance, payment issues, and decreasing stock cost. 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 online dating sites peers.
At a per share price of approximately $5, a almost 50% decrease within just per year, the marketplace and investors seem to have fallen right out of love with “LOV.” As Osmium waits to see whether voters will think its four board nominees singleparentmeet coupon really are a match, listed here is a review of a few of the hedge investment’s other gripes with Spark, centered on a presentation it provided to shareholders in might:
Too little rebranding and marketing strategy that is poor.
Osmium stated in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has accounted for 95percent associated with the organization’s revenue since its inception 17 years back. Spark just got around to rebranding JDate in this present year’s very first quarter, and its own Chairman and CEO Greg Liberman also conceded for this failure on its very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising associated with the JDate rebranding, as well as Christian Mingle, has fallen quick in addition to organization’s paying for these endeavors has already established repercussions that are dire relating to Osmium.
“Spark’s ‘media strategy’ can be a unproven and distraction that is immaterial the business’s core, high-margin premium dating business,” Osmium had written in its presentation. “These interruptions away from core that is scalable have 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% lower 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 site that is dating 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 that is “pleased” with bad outcomes.
Despite profits misses and a stock that is declining, Osmium contends that Spark’s administration is delusional regarding the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits calls explaining the business’s outcomes over the past eight quarters,” Osmium’s presentation states. “Over this time around duration, the organization has produced over $32 million in net LOSSES вЂ” 30% associated with the market limit.”
Spark administration can be maybe perhaps maybe not placing its money where its lips is whenever it comes down to investing within the company.
“Management and Board have actually restricted money in danger 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 of this business.”
Mariah Summers is really company reporter for BuzzFeed Information and it is situated in ny. Summers reports on hospitality, travel and property.