Spark Networks, owner of JDate, Christian Mingle, along with other dating sites, is dealing with a tough activist campaign because of the hedge investment Osmium Partners, which will be seeking to unseat the board and force a sale associated with 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 specific 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 specific situation stated, allowing the activist hedge investment to take solid control and force a purchase for the business. Initially planned for June 17, Spark has delayed the yearly meeting until June 28, a move these sources stated is directed at purchasing Spark additional time 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 public filings.
Osmium, which has 15% of Spark, established its proxy battle in December 2013, citing exactly exactly 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, its “crown jewel,” and therefore its networks that are christian been underperforming in accordance with their online dating sites peers.
At a per share price of around $5, a almost 50% decrease within just per year, the marketplace and investors may actually have fallen out from love with “LOV.” As Osmium waits to see whether voters will think its four board nominees certainly are a match, here is a glance at a few of the hedge investment’s other gripes with Spark, centered on a presentation it provided to investors in might:
Too little rebranding and marketing strategy that is poor.
Osmium said in its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has accounted for 95percent regarding the business’s revenue since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s very first quarter, and its particular 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 associated with JDate rebranding, as well as for Christian Mingle, has fallen brief in addition to organization’s paying for these endeavors has already established serious repercussions, according to Osmium.
“Spark’s ‘media strategy’ can be a unproven and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium composed in its presentation. “These interruptions outside of the scalable core company have resulted in $29.4 million in fixed overhead supported by simply $69 million in revenue. This has triggered 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 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 OKCupid and eHarmony as types of brand name add-ons which have strengthened profitability at these websites.
Management this is certainly “pleased” with bad outcomes.
Despite earnings 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 the word ‘pleased’ no fewer than 20 times on earnings telephone calls explaining the business’s outcomes over 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% associated with market limit.”
Spark management normally maybe maybe not placing its cash where its lips is whenever 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 claimed. “Excluding investment they received at no real expense to on their own, administration and also the Board collectively obtain just 0.2percent of this business.”
Mariah Summers is a continuing company reporter for BuzzFeed Information and it is situated in nyc. Summers reports on hospitality, travel and property.