Google agrees to buy YouTube (zz)

GoogleInc. agreed to buy YouTube Inc. In an all-stock deal worth about $1.65 billion, a transaction that will unite the popular video-sharing site with Google's online advertising system.

Under the terms of the deal, which was expected, closely-held YouTube wocould at least initially retain a significant measure of independence, keeping its brand and offices. YouTube will continue to be based in San Bruno , CA , And all YouTube employees will remain with the company.

Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in the fourth quarter of 2006. the two companies separately today announced a series of deals to license content from music companies for their video services, and YouTube announced a content partnership and ad revenue-sharing dealCBSCorp.

An agreementVivendiSa's Universal Music Group to make available thousands of videos on YouTube is participant ly significant, since Universal Music chief executive Doug Morris last month told investors that YouTube violates copyright laws by allowing users to post music videos and other content. universal Music has considered taking legal action against YouTube over that issue, say people familiar with the matter.

The YouTube deal is the largest acquisition in the eight year history of Google, Mountain View , Calif. It combines Google's global technical infrastructure and system for serving up advertisements from hundreds of thousands of advertisers with YouTube's leading position in serving up videos to users on the web.

YouTube, San Mateo , Calif. , Says consumers view videos -- which range from short home videos of household pets to clips recorded from TV shows -- more than 100 million times daily through its service. YouTube commanded 46% of visits U. S. Online-video sites in September, according to market-research firm hitwise. That compared with a 21% share for the video activitiesNews Corp.'S MySpace site and 11% for Google Video.

The deal -- crafted by the two companies in less than a week -- wocould also be a landmark in the history of the Internet economy. youTube was founded just 19 months ago and has 67 employees. media and technology companies have been keeping a close eye on YouTube as a test case at a moment when consumers 'online-viewing habits and adjust ate strategies are in flux.