DONE DEAL! Google’s mastery at financially savvy, shrewd strategic transactions continues apace: Google is acquiring YouTube for $1.65 billion in a stock-for-stock transaction.
Google proudly noted during the joint YouTube-Google conference call that the non-cash deal “made it cheaper for us.” YouTube shareholders also benefit from a “tax-free transaction,” Google said.
Why $1.65 billion? Is that the worth of YouTube? Not necessarily: Google used a “synergistic model” to justify handing over $1.65 worth of Google stock, not a stand-alone valuation. What will the impact of the stock-for-stock deal be on Google’s financial position? Not much. Google says the transaction will be only “slightly dilutive.”
Why does Google want YouTube? Video is a “very important part of the world’s information” and when searching “what better way to find an explanation than to see it on video,” according to Google co-founder Sergey Brin.
Is Google Video a goner? NO
Google is proceeding full steam ahead with Google Video, as evidenced by the content distribution deals it announced today with Sony BMG Music Entertainment and Warner Music Group. Google intends to use its vast AdSense network to spread its video imprint throughout the Web. As I noted earlier, Google wants to one-up YouTube via a tighter integration of its own video content within Google.com. Google let the world know that it also wants to own the YouTube phenomenon, as a (very large) supplemental bonus!
Google wants YouTube for access to the social networking via video space. YouTube will continue as an "independent" brand.
What are Google’s plans for YouTube? The two companies have brainstormed a “short list” of 20-30 different ways the Google advertising savvy and YouTube video creativity can be leveraged to make users happier, to sell more Google advertising and to help partners monetize their content.
Will YouTube adhere to its strict no pre-roll ads on licensed content stance? NO. The new opportunistic owner is not ruling out any money making opportunity.
Is the Google-YouTube marriage a good day for copyright holders? Time will tell.
YouTube mentioned technology filtering capabilities under development—audio fingerprinting and meta data searching—but Google pointed out that the two companies share the same “safe harbor” approach to copyright “protection” (copyright infringement safety?).