Juno plans to join forces with NetZero
LOS ANGELES Former rivals NetZero and Juno Online Services, the two biggest providers of free Internet access in the United States, will merge in a deal that is expected to create the nation's second-largest Internet access provider.
NetZero and New York-based Juno Online Services announced the $70.7 million deal after markets closed yesterday.
The combined companies would have 7 million subscribers, making it second behind America Online, which has 29 million subscribers. Microsoft's MSN has 5 million subscribers.
The new customer base was cited as a key reason for the merger, which could allow the new company to ask for higher advertising rates. Advertising is the traditional money earner for providers of free Internet access.
"It is a bigger base of eyeballs to sell to advertisers," Gartner Dataquest analyst Lydia Leong said. "When you are dealing with advertising, more eyeballs are better."
Juno chief executive Charles Ardai said his company also will bring its expertise in converting free users to paying customers. NetZero adds a fresh base of customers for Juno to lure into paid service.
The companies' combined revenues are estimated at $41.5 million.
Under the terms of the all-stock transaction, NetZero and Juno will become wholly owned subsidiaries of a new company called United Online Inc. It is expected to trade on the Nasdaq Market under the symbol UNTD.
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