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Viacom’s pledge to pursue its digital strategy more aggressively has raised concerns that the media company could overpay for an internet start-up.

Viacom and other traditional media companies have been circling start-ups that have developed large audiences – YouTube, Facebook, Shutterfly, Bebo and others – as they try to reach young consumers who have moved online.

However, bankers warn that the prices for these assets are escalating by the day, and in some cases could be more than $1bn even though they have little or no revenue. “There are only a few unique internet companies, and they are willing to wait for a buyer,” said a media banker who specialises in mergers and acquisitions. “Every company, no matter how small, says it wants $500m to $1bn.”

Viacom is considered to be one of the most aggressive potential bidders after it installed Philippe Dauman as its new chief executive on Tuesday, and mandated him to speed the company’s internet development. His predecessor, Tom Freston, was ousted on Monday, taking the blame for Viacom’s failure to secure social networking website MySpace and gaming website IGN, two internet properties that were snatched by News Corp last year and have since accelerated its online shift.

Viacom staff clogged the company’s lobby late on Thursday after word slipped out that Mr Freston was leaving the building. He was serenaded with a tearful, 20-minute ovation, according to people in attendance, which hinted at the resistance that Mr Dauman might face as he tries to assert himself at an unusually close-knit, creative company.

Mr Dauman told the Financial Times that he would not pursue any big acquisitions. Instead, relying on his experience as a private equity investor, he would attempt to identify start-up companies earlier in their lifecycle, before they can spark a bidding war.

However, some analysts were sceptical. “We expect this will be a concern for investors given comments from chairman Sumner Redstone that the new team will ‘let no competitor beat us to the trophy’,” said Jessica Reif Cohen of Merrill Lynch. That concern may explain a fall of more than 5 per cent in Viacom’s shares since the changes were announced.

Viacom is not alone in seeking possible internet targets. News Corp, which has already spent close to $1.5bn on internet acquisitions, is still actively seeking other companies, according to bankers. “News Corp, Disney, Time Warner – these companies could spend $1bn or more if they believed they were buying the next Google,” said one M&A adviser.

Viacom, which derives the majority of its revenues from cable advertising sales on youth-oriented networks such as MTV and Comedy Central, has been working frantically in recent months to adapt to the new medium.

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