Oct 9, 2006 : Google Closes $1.6B YouTube Deal
📅 - Internet giant Google (google.com) announced on Monday afternoon that it will buy video-sharing Web site YouTube (youtube.com) for $1.6 billion in stock.
According to the terms of the agreement, YouTube will retain its brand and will keep its offices in San Bruno, California, which is located more than 25 miles from Google's headquarters in Mountain View.
The deal caps almost a year of jostling among major media companies to take over the immensely popular Internet property. Though not profitable, the site -which enables users to share home movies, amateur acts and TV and movie clips - has become one of the Web's most popular sites in under a year, delivering more than 100 million video clips each day to an estimated 50 million users.
The company has reportedly fielded acquisition inquiries from such high powered businesses as Microsoft, Yahoo!, Viacom and News Corporation, among others.
YouTube co-founder and CEO Chad Hurley has been vocal about his desire for the company to stay independent, and told analysts and reporters in a conference call Monday that that would continue to be the case as the company worked with Google.
The acquisition will vault Google to the front of the online video traffic business, where previously it had struggled to catch on. Reports have placed Google Video's share of the market at 10 percent, while YouTube held 46 percent.
YouTube will likely benefit from Google's massive resources, which may help it combat some of the copyright issues that have occasionally plagued the business.
The deal came during a flurry of activity among major media companies looking to acquire hot Internet properties. Yahoo! is in negotiations to buy social networking site Facebook for more than $1 billion.
Part of the motivation for the acquisition was likely the recent purchase by Rupert Murdoch of online community MySpace. Bought last year for $580 million, MySpace is now considered by some to be worth as much as $2 billion.
According to the terms of the agreement, YouTube will retain its brand and will keep its offices in San Bruno, California, which is located more than 25 miles from Google's headquarters in Mountain View.
The deal caps almost a year of jostling among major media companies to take over the immensely popular Internet property. Though not profitable, the site -which enables users to share home movies, amateur acts and TV and movie clips - has become one of the Web's most popular sites in under a year, delivering more than 100 million video clips each day to an estimated 50 million users.
The company has reportedly fielded acquisition inquiries from such high powered businesses as Microsoft, Yahoo!, Viacom and News Corporation, among others.
YouTube co-founder and CEO Chad Hurley has been vocal about his desire for the company to stay independent, and told analysts and reporters in a conference call Monday that that would continue to be the case as the company worked with Google.
The acquisition will vault Google to the front of the online video traffic business, where previously it had struggled to catch on. Reports have placed Google Video's share of the market at 10 percent, while YouTube held 46 percent.
YouTube will likely benefit from Google's massive resources, which may help it combat some of the copyright issues that have occasionally plagued the business.
The deal came during a flurry of activity among major media companies looking to acquire hot Internet properties. Yahoo! is in negotiations to buy social networking site Facebook for more than $1 billion.
Part of the motivation for the acquisition was likely the recent purchase by Rupert Murdoch of online community MySpace. Bought last year for $580 million, MySpace is now considered by some to be worth as much as $2 billion.
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URL source: http://www.thewhir.com/marketwatch/100906_Google_Closes_$1_6B_YouTube_Deal.cfm
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