Spark Networks, owner of JDate, Christian Mingle, along with other dating internet sites, is dealing with an intense activist campaign because of 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 just a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a small number of other niche internet dating sites, is mostly about getting its heart broken.
Osmium Partners is nearly specific to win the four board seats it is gunning for when Spark holds its yearly shareholder conference in a few days, sources acquainted with the problem stated, allowing the activist hedge investment to assume control and force a purchase associated with the business. Originally planned for June 17, Spark has recently delayed the meeting that is annual 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 its very own 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 exactly exactly what it claims are Spark’s bad corporate governance, payment 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.
The market and shareholders appear to have actually fallen out from love with “LOV. at a per share price of approximately $5, a almost 50% decrease within just per year” As Osmium waits to see whether voters will think its four board nominees really are a match, listed here is a review of a number of the hedge investment’s other gripes with Spark, considering a presentation it provided to investors 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 taken into account 95percent associated with the company’s income since its inception 17 years back. Spark just got around to rebranding JDate in this season’s very first quarter, and its own Chairman and CEO Greg Liberman also conceded for this failure on its very very first quarter 2014 earnings call, where it reported its slowest customer figures since 2006.
In addition to this, the advertising associated with JDate rebranding, as well as Christian Mingle, has fallen quick as well as the business’s shelling out for these endeavors has already established serious repercussions, in accordance with Osmium.
“Spark’s ‘media strategy’ can be an unverified and immaterial distraction from the business’s core, high-margin premium dating company,” Osmium composed in its presentation. “These interruptions beyond your scalable core company have actually generated $29.4 million in fixed overhead supported by simply $69 million in income. This has led to Spark earning cash per worker this is certainly 71% lower than competitors 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 standard dating website services of profile creation and use 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 sites.
Management that is “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 believe Mr. Liberman has utilized your message ‘pleased’ no fewer than 20 times on profits telephone phone phone calls describing the company’s outcomes over the past eight quarters,” Osmium’s presentation states. “Over this time around duration, the business has created over $32 million in net LOSSES вЂ” 30% of this economy limit.”
Spark administration can be maybe perhaps not placing its cash where its lips is whenever it comes down to spending within the business.
“Management and Board have actually limited money at an increased risk in outright stock ownership,” Osmium reported. “Excluding commodity they received at no real expense to by themselves, management additionally the Board collectively have just 0.2percent for the business.”
Mariah Summers is company reporter for BuzzFeed Information and is located in nyc. Summers states on hospitality, travel and property.