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Spark Networks continues to seek turnaround after board breakup

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Online personals sites operator Spark Networks could use a financial spark, losing $29 million in last 3 years
Dating websites are struggling to keep up with the immediate intimacy of a socially networked world

Maybe breaking up isn't so hard to do.

Shareholders of Spark Networks Inc., the owner of several online personals sites such as JDate.com and ChristianMingle.com, recently replaced four of its six directors with a slate backed by an activist investor.

One of those booted from the board was Chief Executive Gregory R. Liberman.

The internal strife is occurring at a Los Angeles company whose ticker symbol is LOV and whose principal business is trying to bring people together.

Spark Networks operates in the highly competitive online personals industry. It's geared to meet the needs of hyper-busy adults who have little time to meet people to date.

In addition to the ChristianMingle.com and JDate.com websites, Spark Networks owns and operates AdventistSinglesConnection.com, BlackSingles.com, DeafSinglesConnection.com, MilitarySinglesConnection.com, SilverSingles.com and others.

But Spark Networks hasn't been feeling much love, posting $29 million in net losses over the last three years.

The company is still waiting for a turnaround. In the first quarter, Spark Networks said its revenue declined to $16.6 million, from $17.3 million a year earlier. The company had a net quarterly loss of $2.9 million, unchanged from a year earlier.

The number of paying subscribers is down, from an average of 302,268 in the second quarter of 2013 to an average of 286,000 in the first quarter of this year. Monthly subscription fees for its online personals services and advertising sales make up the bulk of the company's income.

Spark Networks executives declined to be interviewed.

The company's first online venture, JDate, began in a West Los Angeles condominium in 1997. The company now operates more than 30 religious, ethnic, special interest and geographically targeted online communities.

In 2012, the company agreed with other online personals sites to cross-check member applications with sex-offender databases and to work harder to verify the accuracy of information in user profiles.

The latest

The company's lackluster financial results encouraged one of its biggest shareholders, Osmium Partners of Greenbrae, Calif., to launch its own slate of four candidates for the six-member board of directors.

Osmium had contended that the company's expenses were far too high and its financial performance lagged behind its peers.

It was a success, announced July 3, with each of the Osmium Partners candidates winning at least 88% of the votes cast. One of the four, Michael J. McConnell, was chosen as chairman of the board.

In a statement after the vote, McConnell said: "We share a heightened sense of urgency during this period of transition, and together we will work to strengthen the Company's brand and drive its future."

Accomplishments

ChristianMingle.com and JDate.com, which serves Jewish singles, are among the most successful religious-based online personal websites, company executives say.

"With two of the best faith-based distribution platforms online," Liberman told analysts in the most recent earnings conference call, "we have the potential to strengthen communities and drive revenue in areas beyond subscription-based dating."

Challenges

Spark Networks competes against such major players as EHarmony, Match.com and OkCupid. The latter two are subsidiaries of InterActiveCorp, based in New York.

Facebook is considered a newer and different kind of competitor, and dating websites in general are struggling to keep up with the immediate intimacy of a socially networked world.

One popular smartphone app, Tinder, for example, is not only free, it also integrates with Facebook, enabling users to "like" someone they see nearby.

Analysts

Of three analysts that regularly cover Spark Networks, one has it rated as a strong buy and two say investors should hold on to the stock.

ron.white@latimes.com

Twitter: @RonWLATimes

Copyright © 2014, Los Angeles Times
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