Ministry of Innovation / Business of Technology

Google, YouTube acquisition closed; NHL signs on

Where do you start building a sports broadcasting powerhouse? With the sport …

It's official: Google's YouTube acquisition has closed, and the two are now one. YouTube will remain an independently operated company, and the site will keep the YouTube name, alongside Google Video.

Money, money, money

3.2 million freshly minted shares of Google stock, options, and warrants were issued to the YouTube owners. The amount was determined by averaging Google's stock price over the 30 days preceding November 9. During that time, the share price increased by 12 percent, and it has continued to rise by over 4 percent since the end of that period. That means that the YouTube folks received closer to $1.8 billion rather than the announced $1.65 billion price of the deal, counted in today's Google share price. In that context, the $15 million deducted to account for costs incurred by YouTube's operation since the merger was announced seems rather insignificant.

On the other hand, Google also held back 15 percent of the award in a one-year escrow, setting that sum aside to pay for possible copyright infringement lawsuits the YouTube deal might bring on. That's about 457,000 shares, worth $227 million as of this writing. Rumor had it that $500 million would be earmarked for this purpose, though Google CEO Eric Schmidt repeatedly denied it. The relatively small hedge seems to indicate a certain level of confidence that major lawsuits will be few and far between.

YouTube and Google both claim to have copyright holders' interests at heart, and both normally remove infringing clips rather quickly, once notified of a problem. That's one reason for Google's cool nerves. The other part of the equation is the ongoing dealmaking process, where YouTube continues to make strides in its professional relationships with major content providers.

Hockey, hockey, hockey

The latest move in that department is an agreement with the NHL to broadcast league-provided game highlights and behind-the-scenes clips on NHL-branded YouTube pages in return for a share of the advertising take. The official material will be supplemented with user-generated clips and a dedicated, hockey-themed channel. That coverage should supplement the existing full-game broadcasts that Google Video started to carry a couple of weeks ago quite nicely.

It's YouTube's first deal with a major sports league, though executives are reportedly discussing similar deals with other national sports leagues. "But this is a true milestone for us," says YouTube VP of content Kevin Donahue. "We anticipate creating a truly great forum for hockey fans." Following the recent CBS agreement and record label bonanza that accompanied the buyout, it's starting to look like YouTube is going legit. Every agreement signed with a mainstream content provider pushes lawsuit fears away another notch, and before too long, Google could have a miniature media powerhouse on its hands.</p

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