Spark Networks, owner of JDate, Christian Mingle, as well as 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 purchase associated with the company that is troubled.
If love is just a battlefield, then Spark Networks, owner of JDate, Christian Mingle, and a number of other niche online dating sites, is mostly about to have its heart broken.
Osmium Partners is practically 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 specific situation stated, allowing the activist hedge investment to assume 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 geared towards purchasing Spark additional time 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 public filings.
Osmium, which has 15percent of Spark, established its proxy battle in December 2013, citing exactly just just what it claims are Spark’s bad business governance, payment issues, and decreasing stock cost. The hedge fund additionally alleges that Spark has mismanaged JDate, its “crown jewel,” and therefore its Christian systems have actually 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, centered on a presentation it offered to investors in might:
Too little rebranding and bad online marketing strategy.
Osmium said with its presentation that Spark has neglected to rebrand JDate, which, along side Christian Mingle, has taken into account 95percent associated with the business’s income since its inception 17 years back. Spark just got around to rebranding JDate in this current year’s first quarter, and its particular Chairman and CEO Greg Liberman also conceded for this failure on its very very very first quarter 2014 earnings call, where it reported its subscriber numbers that are slowest since 2006.
In addition, the advertising associated with JDate rebranding, as well as for Christian Mingle, has fallen brief while the organization’s shelling out for these endeavors visit hookupdates.net/localmilfselfies-review has already established repercussions that are dire in accordance with Osmium.
“Spark’s ‘media strategy’ is an unverified and immaterial distraction from the business’s core, high-margin premium dating company,” Osmium penned with its presentation. “These interruptions away from core that is scalable 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.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 use 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 profits misses and a stock that is declining, 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 telephone telephone calls describing the business’s results over the past eight quarters,” Osmium’s presentation states. “Over this time around duration, the business has produced over $32 million in net LOSSES вЂ” 30% of this economy limit.”
Spark administration can also be not putting its cash where its lips occurs when it comes to spending within the business.
“Management and Board have actually restricted money in danger in outright stock ownership,” Osmium reported. “Excluding investment they received at no real price to by themselves, administration and also the Board collectively possess just 0.2% for the business.”
Mariah Summers is just company reporter for BuzzFeed Information and it is located in nyc. Summers states on hospitality, travel and estate that is real.