One Bites the Dust - FreeInternet.com Files for Bankruptcy
October 9, 2000
WAY, Washington - Users of free Internet Service Providers
may have had the lyrics of the 1980 hit "Another One Bites
the Dust" running through their heads this week, after yet
another free ISP disclosed its financial problems. On Friday, FreeInternet.com
parent Freei Networks filed for Chapter 11 bankruptcy protection
in Seattle. The bankruptcy filing comes one week after the company
laid off 30 percent of its workforce, reportedly because it was
unable to meet its payroll. Several days before seeking bankruptcy
protection, Freei also canceled its planned IPO, citing "current
FreeInternet.com spent lavishly on national television advertising
campaigns, hiring celebrities such as basketball star Shaquille
O'Neal to advertise its free Internet service. Television viewers
may be familiar with the popular talking "Baby Bob" character,
who introduced FreeInternet.com in national television advertisements.
Baby Bob proved so popular that FreeI signed a deal in August to
create a television series based on the Baby Bob character for the
CBS Television Network.
Lavish spending without sufficient revenue apparently helped cause
the demise of Freei. It has been reported that in 1999, Freei spent
$19 million, while total revenues were less than $1 million.
Netzero reported that it had entered into an agreement to acquire
certain assets of FreeInternet.com, subject to the approval of the
bankruptcy court. "Our intent is to provide maximum continuity
for Freeinternet.com users. NetZero intends to help Freeinternet.com
users transition as smoothly as possible," said Mark R. Goldston,
Chairman and CEO of NetZero in a statement.
No details of the transaction with NetZero were available. With
3.2 million users, FreeInternet.com is the fifth largest free ISP
in the United States. Freei Networks is based in Federal Way, Washington.