Google ‘among suitors pursuing YouTube’

YouTube, the fast-growing video website, has received a flurry of takeover offers in recent days from suitors including Google, the web search specialist, say people close to the company.

The wave of interest comes on the heels of reports that Yahoo, a Google rival, had offered to buy Facebook, a social networking site geared towards university students, for $1bn.

“There have been a lot of offers,” said a person close to YouTube, with bids in the range of $1.5bn to $1.6bn.

Google and YouTube declined to comment.

News Corp, which last year bought social networking site MySpace.com for $580m, has looked “very closely” at YouTube in recent weeks, according to people familiar with the discussions.

However, they said the media group decided not to make an offer for YouTube because of a $1.5bn minimum price tag being demanded by YouTube’s backers, and because News Corp had decided it could develop YouTube’s features on MySpace. News Corp declined to comment.

Rumours that Google had offered $1.6bn to buy YouTube surfaced yesterday morning on TechCrunch, a technology blog. News Corp was included in a list of potential suitors in a recent article in the New York Post.

YouTube, which allows users to upload and share video clips, is the latest in a string of young companies focused on “user-generated content” to attract the interest of big media and internet companies in recent months.

News Corp, which is owned by Rupert Murdoch, kicked off the craze when it bought MySpace last year. Although the site’s $580m price was considered steep, the deal has since come to be seen as a master stroke.

Brad Greenspan, MySpace’s founder, is seeking a federal investigation of the sale to News Corp, claiming the deal defrauded shareholders by undervaluing the site.

In spite of intense interest, Chad Hurley, YouTube’s co-founder and chief executive, said in an interview with the Financial Times two weeks ago that the company was not interested in putting itself up for sale.

“We’re just going to continue to build the business on our own,” he said. Mr Hurley said his strategy had the backing of YouTube’s financiers at Sequoia Capital, the venture capital group that was also an early investor in Google.

“That’s why we went with Sequoia, to have a chance to build a great business,” Mr Hurley said. “They’re not a VC that builds small companies.”

Although YouTube has struck high-profile advertising deals in an effort to make money from its huge audience, the presence of large amounts of copyrighted material on the site has led some observers to suggest that it might need to seek a buyer to avoid being crippled by lawsuits.

Josh Bernoff, an analyst at Forrester Research, said a takeover by Google, which already has a video service, would “make a strange sort of sense”.

“Google has a weakness in that the community space in the web is becoming more and more important,” he said. “They’re beginning to lose opportunities to MySpace.”

Mr Bernoff said Google’s engineers could help YouTube build new tools that limit users’ ability to upload copyrighted content.

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