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Dixons to Dump Freeserve for UK Internet Deal with AOL?

News, 05 August 2003

One of Britain’s most profitable internet access marketing deals may soon come undone, according to reports at the weekend.

The Sunday Telegraph claimed that Dixons – the nation’s biggest electronics retailer – is set to terminate its five-year agreement with Freeserve, the ISP it part-owns, in favour of a deal with America Online.

Under the existing arrangement, computers sold in outlets of Dixons and its PC World and Curry’s chains come pre-loaded with Freeserve software. The agreement has helped the ISP become Britain’s biggest, and earned an estimated £600 million ($967m; €855m) for Dixons.

Now, however, Dixons is thought to be turning its back on Freeserve, even though the retailer holds a stake in Wanadoo, the internet firm’s parent.

According to Sunday’s report, Dixons will unveil a deal with AOL “within weeks”. Expected to commence in February next year, the new agreement will see the US online giant pay a commission for every Dixons customer it recruits. The two firms will also produce a joint ad campaign, while Dixons will promote AOL in store.

AOL is said to have offered Dixons £10m to clinch the deal, a sum Freeserve was unwilling to match.

None of the parties involved have commented to date.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff