Psychic Friends Network Company Files For Bankruptcy
Inphomation Communication Inc., operator of the Psychic Friends Network, filed for Chapter 11 bankruptcy protection this week, with liabilities of $26 million and assets of about $1.2 million.
At its peak in the early 1990s, Baltimore-based Inphomation had estimated revenue of $100 million to $125 million.
But spiraling competition - which included price-cutting and free phone minutes offered by rivals - and some bad luck and management missteps combined to put the marketing company deep into the red.
Steve Dworman, publisher of Infomercial Marketing Report in Los Angeles and an expert on the TV infomercial business, estimated that Inphomation’s revenue has plunged to between $25 million and $30 million in the last two years.
On Monday in U.S. Bankruptcy Court, it filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
The Psychic Friends Network, which has used singer Dionne Warwick as hostess on its 30-minute infomercials, once was the second-highest-grossing infomercial on television, trailing only Jane Fonda with her fitness video.
Indeed, Inphomation, founded in 1990, pioneered the use of 900 phone numbers and backed them with infomercials and a network of about 2,000 psychics.
People could call for advice on their love lives, careers and financial prospects - all at $3.99 a minute.
Now there is competition from a bevy of telephone crystal-ball gazers and cable-TV infomercials that masquerade as serious talk shows, slashing the market share of the Psychic Friends Network.
Documents filed in the federal bankruptcy case list about 200 creditors and state that Inphomation is disputing about $8 million of its estimated $26 million in liabilities.
Bankruptcy attorney James Olson said executives hope to keep the company operating.
Publisher Dworman said Baltimore businessman Michael Lasky, who owns Inphomation, should have known what was coming.
“All this could have been avoided if he’d only called his own psychic lines,” Dworman said.
xxxx INFOMERCIAL PIONEERS Inphomation pioneered the use of 900 phone numbers and backed them with infomercials and a network of about 2,000 psychics.