Reprinted courtesy of the New York Times
Parent of Dating Sites Looks for a Match
By ANDREW ROSS SORKIN
Published: January 4, 2008
Wanted: Single dot-com Yenta seeks ambitious Mr. Big with deep pockets for a long-term relationship.
The parent company of the popular Jewish online dating site JDate has put itself up for sale, people close to the auction said Thursday, and is already in talks with several prominent media companies.
The owner of JDate.com, Spark Networks, which owns dozens of online personal sites aimed at religious, ethnic and other special interests, is in early talks with suitors that include Yahoo; eHarmony; IAC/InterActiveCorp, the Barry Diller company that owns Match.com; and MySpace, which is part of the News Corporation, these people said.
Shares of Spark, which trades under the ticker LOV, have jumped more than 20 percent in recent weeks. Its shares closed yesterday at $4.90, giving the company a market value of $131.4 million. Analysts suggested that a suitor might pay as much as $185 million for the company.
Some industry executives, however, have questioned the company’s growth prospects; its revenue grew only 5 percent from 2005 to 2006.
Online dating sites have exploded in popularity in recent years as both the younger and older generations have flocked to them and other social networks to meet people. Social networks generated nearly $650 million a year in sales.
But growth has slowed after year-over-year gains of more than 70 percent early in the decade. Jupiter Research, an Internet consulting firm, said the market grew 10 percent in 2006, to $649 million, and is likely to grow 8 percent a year until 2011.
For Spark, which was started in 1997 in the home of Joe Y. Shapira, a sale would be the culmination of years of expanding the company by starting and buying Web sites like AmericanSingles.com, BlackSingles.com, ChristianMingle.com and LDSMingle.com, among others.
According to comScore Media Metrix, Spark had 2.45 million unique visitors in November 2007, ranking it No. 4 among personal sites behind Yahoo Personals, Match.com sites and Singlesnet.com. Spark reported $6.56 million in net income with revenue of $68.85 million for 2006. The company has hired AGM Partners, a boutique investment bank focused on media companies, to run the sale process, people briefed on the auction said.
A spokesman for Spark, Gail Laguna, did not return repeated calls for comment.
JDate has become part of the vernacular on sitcoms and shows like “The Daily Show.” It is widely considered the model for online personal sites.
“JDate is the best example of a successful niche dating site on the planet,” said Mark Brooks, who follows the industry and is author of the blog OnlinePersonalsWatch.com.
“It’s a very attractive target,” Mr. Brooks said, adding that for social sites to work well, “the big sites need to get bigger.”
“The more people on a site, the more the site has to offer.”
Despite all of the publicity around JDate, it is not among Spark’s most trafficked sites. AmericanSingles, with 1.96 million unique users, is its top site, followed by BlackSingles with 574,000; bbwpersonalsplus with 241,000; and ChristianMingle at 215,000. JDate had 117,000 unique users in November.
For rivals like the unit Match.com unit of IAC, analysts say Spark would bolster business, allowing it to offer more niche categories to its 20 million members. Spark could also provide a personal service for MySpace and a natural extension for eHarmony, which has focused strictly on its high-end subscription service and falls right behind Spark, with total traffic of 2.18 million.
Most of Spark’s sites allow users to post ads, but users cannot respond to them without a subscription.