Blognewsandmore: Google ready to buy YouTube for $1.6 Billion

Google in talks to buy YouTube for $1.6 Billion

Deal Could Put Search GiantIn Top Spot for Online Video;A Front Door for Web Visits

By KEVIN J. DELANEYOctober 7, 2006
The latest prize in the great Internet land grab, online-video company YouTube Inc., could soon be snapped up by Google Inc.
Web-search giant Google is in talks to acquire YouTube for roughly $1.6 billion, a person familiar with the matter says. An acquisition of the closely held company would catapult Google to the lead spot in online video at a moment when consumers are rapidly increasing the amount of time they spend viewing video clips online, and Internet video advertising is booming.
The discussions between Google and YouTube are still at a sensitive stage and could break off, says the person familiar with the matter. Other technology, media and entertainment companies have expressed interest in taking stakes in YouTube this year, according to people familiar with the matter. Google rival Yahoo Inc. earlier this week expressed interest in holding acquisition talks with the video start-up, these people say. YouTube also turned down a lower proposed value from Google earlier this week, before commencing discussions about the possible $1.6 billion deal.
A YouTube spokeswoman and a Google spokesman said they don't comment on "rumors and speculation." Rumors of such talks were reported on the TechCrunch blog.
The discussions come amid a flurry of acquisition talks initiated by media and technology companies looking to broaden their online presence. Yahoo and other companies have recently held discussions about buying social-networking site Facebook Inc. for around $1 billion or higher, say people familiar with the matter. The Yahoo talks with Facebook are continuing, says one of those people. Sony Corp.'s Sony Pictures Entertainment in August said it paid about $65 million to purchase closely held video-sharing site Grouper Networks Inc. Rupert Murdoch's News Corp. bought social-networking site MySpace last year for $650 million in a landmark transaction.
ALL EYES ON YOUTUBE

See a chart comparing YouTube's traffic with other top video sites.
YouTube's 29-year-old CEO, Chad Hurley, and its 28-year-old chief technology officer, Steve Chen, started the company in Mr. Hurley's Menlo Park, Calif., garage last year, along with another former colleague from eBay Inc.'s PayPal electronic-payment unit. Early videos on the site prominently featured the cat of Mr. Chen.
Like Web browsers and search engines before them, YouTube and social-networking sites are recognized as front doors to the Internet where companies can grab users' attention, and to try to link them to other services or hit them with marketing messages. News Corp. has already turned MySpace into a lucrative ad and promotional machine; in August, Google guaranteed MySpace and some other News Corp. sites a minimum of $900 million in ad revenue over the next 3½ years under an ad-brokering deal. Media companies have also been keeping a close eye on YouTube as a test case at a moment when consumers' online-viewing habits and corporate strategies are in flux.
A deal between YouTube and Google would combine Google's massive online ad system, which handles ads from hundreds of thousands of advertisers, with the top online-video site, according to several research firms. YouTube, San Mateo, Calif., says consumers view videos -- which range from short home videos of household pets to clips recorded from TV shows -- more than 100 million times daily through its service.
WALL STREET JOURNAL VIDEO

WSJ's Kevin Delaney reports that Google is in early talks to acquire YouTube and that Yahoo has also expressed interest in a possible deal.• Plus, MarketWatch's Bambi Francisco explains why a deal between Google and YouTube could soften the blow of potential copyright lawsuits for the video sharing site.
A purchase by Google, Mountain View, Calif., would also bring YouTube into a company that doesn't compete with other media concerns by producing or broadcasting its own video. That likely would make it easier for YouTube to continuing cutting deals with media and entertainment companies to carry their videos. General Electric Co.'s NBC Universal signed an advertising and content deal with YouTube in June, and Warner Music Group Corp. last month said it is working with YouTube to make its music videos and other content available through the site.