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(June 7, 2001) -- Struggling Internet access providers NetZero and Juno Online Services have agreed to merge as an ISP with approximately 7 million subscribers. The two companies will each become part of a new holding company, United Online, with NetZero stockholders expected to own 61.5% of the new company's stock and Juno stock holders owning the remaining 38.5%.

Each company originally pursued an ad-supported model designed to provide subscribers with free Internet access. That approach does not appear to have worked very well.

The companies said this evening that only 40% of their combined first-quarter revenue came from advertising and e-commerce. As United Online, they plan to market free and billable services under the Juno moniker.

Mark R. Goldston, chairman-CEO of NetZero, will become chairman, president and CEO of United. NetZero CFO, Charles S. Hilliard, will retain that title in the new venture.

As to the fates of other executives, including Juno president-CEO Charles Ardai, the companies only said that "senior executives from both firms are expected to continue in key roles within the new company."

As the market closed today before the merger announcement, Juno stock was trading at $1.48, and the New York-based company had a market cap of $61.7 million. NetZero, based in Westlake, Calif., closed at 95 cents and had a market cap of $119 million. -- Catharine P. Taylor

Copyright June 2001, Crain Communications Inc.

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