Spark Networks, owner of JDate, Christian Mingle, along with other dating web sites, is dealing with an intense activist campaign because of the hedge investment Osmium Partners, which can be trying to unseat the board and force a purchase of this 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 nearly specific to win the four board seats it is gunning for when Spark holds its yearly shareholder meeting week that is next sources acquainted with the specific situation stated, 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 yearly conference until June 28, a move these sources stated is geared towards purchasing Spark more hours to rally investors to vote down Osmium’s proposal or preempt a forced sale by securing 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, citing exactly exactly what it claims are Spark’s bad business governance, settlement issues, and decreasing stock cost. 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 may actually have actually fallen out from love with “LOV. at a per share price of around $5, a almost 50% decrease within just per year” As Osmium waits to see whether voters will think its four board nominees are really a match, listed here is a review of a few of the hedge investment’s other gripes with Spark, according to 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 accounted for 95percent associated with organization’s revenue since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s very very first quarter, and its own Chairman and CEO Greg Liberman also conceded for this failure on its very very first quarter earnings call, where it reported its slowest customer figures.
In addition to this, the advertising associated with the JDate rebranding, as well as Christian Mingle, has fallen brief therefore the business’s paying for these endeavors has received serious repercussions, in accordance with Osmium.
“Spark’s ‘media strategy’ is a unverified and distraction that is immaterial the business’s core, high-margin premium dating company,” Osmium published with its presentation. “These interruptions away from scalable core company have actually resulted in $29.4 million in fixed overhead supported by simply $69 million in income. [This] has led to Spark revenue that is generating worker that is 71% less than rivals Match, 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 solutions of profile creation and usage 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 decreasing stock cost, 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 phone calls explaining the business’s outcomes throughout 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% regarding the economy limit.”
Spark administration can be maybe perhaps perhaps maybe maybe not placing its cash where its lips occurs when it comes down to spending when you look at the business.
“Management and Board have actually restricted money in danger in outright stock ownership,” Osmium claimed. “Excluding commodity they received at no real price to on their own, administration plus the Board collectively possess just 0.2percent associated with the business.”