Spark Networks, owner of JDate, Christian Mingle, as well as other dating web sites, is dealing with a tough activist campaign by the hedge investment Osmium Partners, that will be seeking to unseat the board and force a purchase associated with the 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 online dating sites, is all about to obtain its heart broken.
Osmium Partners is practically specific to win the four board seats it is gunning for when Spark holds its yearly shareholder conference week that is next sources acquainted with the specific situation said, allowing the activist hedge investment to take solid 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 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 public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing just exactly exactly what it claims are Spark’s poor business governance, settlement concerns, and decreasing stock cost. The hedge investment also alleges that Spark has mismanaged JDate, its “crown jewel,” and that its Christian systems have actually been underperforming relative to their internet dating peers.
The market and shareholders seem to have actually fallen right out of love with “LOV. at a per share price of around $5, a almost 50% decrease in under per year” As Osmium waits to see whether voters will think its four board nominees are really a match, here is a glance at a few 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 said with its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95% for the business’s income since its inception 17 years back. Spark just got around to rebranding JDate in this season’s very very first quarter, and its own Chairman and CEO Greg Liberman also 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 Christian Mingle, has fallen brief as well as the business’s shelling out for these endeavors has received serious repercussions, based on Osmium.
“Spark’s ‘media strategy’ is an unverified and immaterial distraction from the business’s core, high-margin premium dating company,” Osmium published in its presentation. “These interruptions away from scalable core business have actually generated $29.4 million in fixed overhead supported by simply single parent dating free $69 million in revenue. This has led to Spark earning cash per worker that is 71% less than rivals Match.com, eHarmony and Zoosk.”
Failure to innovate.
Osmium also 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 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 management is delusional in terms of the business’s financials.
“We think Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on earnings telephone phone calls describing the business’s outcomes over the past eight quarters,” Osmium’s presentation states. “Over this time duration, the business has generated over $32 million in net LOSSES вЂ” 30% associated with the economy limit.”
Spark management can also be maybe perhaps not placing its cash where its lips occurs when it comes down to spending when you look at the business.
“Management and Board don’t have a lot of money at an increased risk in outright stock ownership,” Osmium stated. “Excluding investment they received at no real expense to by themselves, administration therefore the Board collectively have just 0.2percent associated with the Company.”
Mariah Summers is just a continuing company reporter for BuzzFeed Information and it is situated in New York. Summers reports on hospitality, travel and estate that is real.