News Corp 'displeased' by Google-YouTube deal - WSJ

 

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By Steve Malone

Posted on 12 Oct 2006 at 10:17

It seems that News Corp is not best pleased with the way Google snapped up YouTube. According to the Wall Street Journal the company has complained that the search engine did not give the Murdoch organisation an 'opportunity to participate in the sale process' before going ahead.

News Corp was already concerned that MySpace was bleeding too much traffic to YouTube and not enough was going to MySpace Video. Following the sale to Google, MySpace chiefs worry that YouTube is about to become an even more formidable opponent.

There has already been some sabre rattling by News Corp over YouTube. Several months ago News Corp's CEO Peter Chernin told investors that the likes of YouTube have been getting a free ride from MySpace traffic. The media giant is now threatening to cut off links from MySpace to YouTube

News Corp is feeling even more aggrieved since it signed a deal worth $900 million between MySpace and Google two months ago. The WSJ says that Google with YouTube and News Corp with MySpace are to meet this week to 'discuss new ways of working together'.

Certainly, Google will want to keep News Corp onside. Apart from the risk to the lucrative MySpace contract, it now has a majority of the video advertising market and will want to keep it that way. The likely outcome is that the AdSense programme will be extended to cover MySpace Video.

Meanwhile arch rival Yahoo! is struggling to keep up with Google's rapid expansion. According to the New York Times, Yahoo! had all but agreed terms and a price with YouTube several weeks ago but the talks broke down. Google quickly stepped in and opened its wallet. Now, rumours are circulating that Yahoo! is ready to put in a bid for rival social networking site FaceBook at around $1 billion.