It all started as a rumor on Techcrunch and turned into mainstream media story without much facts at the end of last week. In an incredibly fast face the rumor has turned into a fact and today Google announced that it has YouTube for $1.65 billion in an all stock transaction. Google announced it in the afternoon as a press release and they did a webcast where Google CEO Eric Schmidt along with YouTube CEO Chad Hurley announced the deal from the YouTube headquarters and offered some forward thoughts on the deal. A recording of the webcast can is here.
According to the announcement, YouTube will keep on functioning as an independent entity protecting its identity and the brand. Schmidt thinks that the exciting media platform that YouTube has built aligns very well with their mission statement of no other than “to organize the world’s information and make it universally accessible and useful”. The deal is expected to close before the end of the year.
This announcement came after both Google and YouTube made big content deals with the traditional media giants like Song BMG, CBS, and Universal. I think this is a sign that Google has tested the waters with big content providers before they made their buy decision. CBS is among the content providers who said they will test a new technology on YouTube to determine copyright infringements in videos and prevent posting such videos. Only time will tell how Google will handle the copyright issues that has been bothering YouTube for a long time.
It is also being said that Yahoo was in the bidding war until the very end. This may explain the $50m increase in the price compared to the rumored price of $1.6b. If Yahoo was really in the bidding war, this loss may urge them to be reflexive on a possible deal with Facebook.
There is an insane amount of buzz and discussion in the blogosphere as one can imagine. I don’t have any more time to discuss if this deal makes any sense (I will do that soon hopefully) but Om Malik thinks it is an eBay-Skype kind of deal in the long run and Mark Cuban still thinks Google is crazy buying YouTube.
[tags] business, google, youtube, acquisition, video[/tags]