Google 'in talks to buy YouTube for $1.6bn'

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YouTube, the hit web site that allows registered users to share online videos, is reportedly set to be acquired by cash-rich Google for around $1.6bn. Sources contacted by The Wall Street Journal said talks were at an early and sensitive stage, but the acquisition would catapult Google to the top of the online video league. The Wall Street Journal said Google's arch rival Yahoo! had last week expressed an interest in buying YouTube.

The reported talks come amid a landgrab of social networking and video sharing sites by major media groups and online portals, all keen to gain a slice of the burgeoning market for online video advertising.

Last year Rupert Murdoch's News Corporation bought social networking site MySpace for $580m. MySpace has soared to the No.1 spot for online video, and since gained a $15bn valuation. Yahoo! is said to have looked at buying MySpace rival Facebook for $1bn.

Google recently won the contract to sell advertising on MySpace in a deal guaranteed to generate $900m for News Corporation over the next three-and-a-half years.

An acquisition of YouTube would allow Google to combine its advertising system within YouTube's pages. YouTube serves more than 100m videos each day. Though some analysts say YouTube faces a major battle with media groups over copyright infringement (much of its content is illegally copied and uploaded material), others point to a growing number of alliances with media partners such as Time Warner to distribute programmes online.

Lovelace Consulting  |  09.10.2006

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