Match.com could look to consolidate online dating sector (mergermarket)

Match.com could snatch up several online dating sites in an attempt to consolidate the industry, sources told this news service. The Dallas, Texas-based dating site, owned by New York City-based internet company IAC, recently purchased targeted dating site operator PeopleMedia from American Capital and other investors for USD 80m, and might look at further buys in an attempt to grow a business that has suffered from stagnant growth.

Match.com’s 2008 revenues grew 5% to about USD 365m year-on-year, compared to a 12% rise from 2006 to 2007.

Deepak Kamra, a partner at Canaan Partners and an original investor in Match and social dating network Zoosk, said dating sites that offer social networking components will be good targets for traditional players like Match and eHarmony. Kamra predicted that Match — which has gone through three CEO changes in the past two years — is likely seeking a strategic change to its business and could look at new categories for continued growth. “[Mainstream dating sites] have to get into social dating or risk giving up a large chunk of the market,” he said.

While mainstream sites have traditionally ignored social dating, these types of sites are starting to rise in popularity, one industry executive said. Match has struggled for the past several years to innovate its site, the executive added, noting that its attempt last year to break into the social networking space with its Little Black Book application for Facebook was largely unsuccessful.

Another industry executive said he believed Match was more likely to further consolidate both traditional subscription and free dating sites than to take on a potentially risky new vertical like social dating. Match has already made a play at free sites with its launch of dating service Down to Earth in January, he noted. Owning several large free sites, he added, could provide lead generation for Match’s paid services.

Match has recently been more active in M&A than its competitors. Besides its acquisition of PeopleMedia, Match took a 27% stake in European dating operator Meetic in exchange for Match’s European operations in February. IAC Chairman Barry Diller also publicly stated in April that he would like to buy Yahoo! Personals. According to a source close to the situation, Match has been trying to buy the site for at least the past three years, but the two companies were unable to agree on price. Match valued the site at about USD 400m to USD 500m, while Yahoo! wanted a 30 percent higher offer. Yahoo! considers the site non-core and CEO Carol Bartz has put it on its short list of businesses to sell, the source said. IAC had also taken a look at Spark Networks, which owns the popular JDate site for Jewish singles, but faced disagreements with the company’s board of directors, the source said. He declined to comment further on these negotiations.

Yahoo! and Spark Networks declined to comment. Match.com could not be reached for comment.
by Olivia Oran in New York

Target: Zoosk, Inc., Spark Networks, Yahoo (dating Web site)
Bidder: Match.com LP, Match.com LP, Match.com LP

Source : 
mergermarket