Rumors on Friday were that Yahoo would buy YouTube for $1.6 billion.
In fact, Google just did, for $1.65 billion.
As I noted earlier Mark Cuban says the company is worthless but if a sale were inevitable (and it was) Google makes a lot more sense as a partner. Not just because the stock is worth more, and it’s heading higher while Yahoo is mainly treading water.
The fact is that Yahoo’s track record with acquisitions is abysmal. Have you heard lately from Broadcast.Com, the company Cuban sold to Yahoo for $6.7 billion? How about Geocities? Yoyodyne? Yahoo has become a Roach Motel for Internet companies — they check in but don’t check out.
Google’s track record is mixed. I’m not a fan of how they handled Blogger. Keyhole, which became Google Earth, has worked out much better.
And it should have been obvious Google was on top of the very concerns Cuban expressed over the weekend, announcing deals with both Warner and Sony BMG to allow the use of video on its network. This gives it a model for approaching the rest of the content industry.
Yahoo is a Web site. Google is, thanks to its
dark fiber purchases and large number of operating units around the
world, a network. Having a presence in Brazil, or in Minneapolis, does
more than spread the Google wealth around. Decentralizing the company
means it has an incentive to build that dark fiber network, to light
that dark fiber network, and to become, not just a search company, but
an Internet Service Provider.
With a market cap of $130 billion, $1.6 billion in new stock represents
very little dilution, and very little risk to the existing
shareholders. In fact, Google’s shares rose 2.2% today, double the price of YouTube.
So, Mr. Cuban. Before buying YouTube Google made major deals with content providers that protect YouTube subscribers. And by acquiring YouTube, Google has yet-another motivation to light its fiber, to acquire more fiber, and to become a real network.
Not a bad day’s worth of business.
UPDATE: I had to end comments on this thread because of comment spam. It was the fault of no one here. Please continue the discussion wherever you see fit.