DEAL: Analysts say merger would be good for both firms
Province
YouTube co-founders Chad Hurley (left), 29, and Steven Chen, 27, pose with a laptop at their office in San Mateo, Calif. Photograph by : The Associated Press
SAN FRANCISCO — Internet search leader Google Inc. is in talks to acquire the popular online video site YouTube Inc. for about $1.6 billion US, The Wall Street Journal reported Friday, citing a person familiar with the matter.
Mountain View, Calif.-based Google and San Mateo, Calif.-based YouTube are still at a sensitive stage in the discussion, the newspaper reported.
The blog TechCrunch had reported on rumours of the acquisition talks. Google spokesman Jon Murchinson said the company “doesn’t comment on rumours and speculation.” YouTube officials didn’t return telephone calls.
Analysts said a Google acquisition of YouTube would make sense for both companies if the reported talks lead to a deal, especially considering Google’s $10 billion in cash on hand.
“It’s damn cheap for a company that already has a global presence,” said Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research. “YouTube’s brand identity is no less than Google’s and is no less than Coke’s.”
As YouTube’s popularity continues to soar, she said, Google can help make sure the site’s infrastructure can keep pace.
The acquisition would also immediately propel Google to the top of the online video heap, an area where Google is lagging. YouTube eclipsed traffic on Google’s video site in February. By July, about 30.5 million people visited YouTube, compared with 9.3 million to Google Video and 5.3 million to Yahoo Inc.’s Yahoo Video, according to Nielsen/NetRatings.
YouTube users watch more that 100 million videos daily.
Google’s video service lets everyday users post clips, too. Unlike YouTube, Google also gives them the choice of selling videos. All YouTube clips are free.
YouTube was founded in February 2005 by three former employees of EBay Inc.’s PayPal electronic-payment unit.
© The Vancouver Province 2006
