Google Buys YouTube in Stock-for-Stock Transaction

Google YouTubeGoogle has purchased YouTube in a stock-for-stock transaction. This confirms the earlier rumors started by TechCrunch. YouTube.com will be run independently according to the press release.
When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google's own fast-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google's technology, advertiser relationships and global reach, YouTube will continue to build on its success as one of the world's most popular services for video entertainment.
The Associated Press reports that YouTube.com also cut content deals with CBS and two major music labels: Vivendi's Universal Music Group and Sony BMG Music Entertainment. There are some funny names out there in posts discussing the deal, like GooTube and GoogTube.

MarketWatch has an informative article about the deal including this snippet that YouTube has hardly any revenues.
To be sure, there are plenty of risks for Google. For starters, YouTube right now generates very little, if any, actual revenues, analyst point out.
The article also says Google Video will remain in existence.
During the conference call, Schmidt also added that Google Video will remain as a "viable" feature. There is speculation that Google will dump its ailing video feature in favor of YouTube.
It seems like Google would eventually want to merge the two video sharing services at some point. YouTube.com can be found here and Google Video can be found here.

Posted on October 9, 2006

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