Google in talks to buy YouTube
Web search leader Google Inc is in talks to buy YouTube Inc, the world’s leading Web site for video entertainment, for close to $1.6 billion, the Wall Street Journal reported on Friday, citing a person familiar with the matter.
According to the newspaper, the talks are at a sensitive stage and could break off. YouTube declined comment on the report. Google representatives could not immediately be reached.
YouTube was founded in February 2005 as one of dozens of Internet video start-ups. It has exploded in popularity since last November by letting users share short video clips — both home videos and programming copied off television.
Rumours of a Google-YouTube deal appeared Thursday on the TechCrunch blog of Web start-up powerbroker Michael Arrington, who said such talk was circulating among Silicon Valley venture capitalists after months of speculation that YouTube was an acquisition target.
“YouTube is the hottest property on the Web, one that could be worth much more than $1.6 billion if monetized properly,” said RBC analyst Jordan Rohan, adding he had no information on whether YouTube would be acquired. His calculation is based on combining YouTube’s audience and Google’s advertising prowess.
For Google, the acquisition of YouTube would thrust the Web search leader quickly into the emerging market for video advertising, where it has only a tiny foothold compared with Yahoo Inc and various Web start-ups, Rohan said.
“Essentially Google can give less than 2 per cent of its market cap and keep this platform out of the hands of everyone from Yahoo to Microsoft to Viacom,” said Rohan. “There is something to be said for that old playground game of ‘keep-away’,” he said. “Defense here matters.”
YouTube has asked for about $1.5 billion during talks with potential suitors in recent weeks, sources familiar with the matter said. MTV owner Viacom, still hurting after News Corp elbowed it aside last year to acquire top social networking site MySpace.com, recently dodged questions on whether it had courted YouTube — another of the most popular Web destinations for young people.
“It’s a very good company,” Viacom chairman Sumner Redstone said in a TV interview with Charlie Rose on Wednesday. YouTube reports serving about 100 million videos daily and has drawn scrutiny from major media companies for copyrighted material appearing on its pages without their consent.
YouTube commands a 47 per cent share of the online video search market as of Sept 30.
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