The Wall Street Journal’s Kevin Delaney and Matthew Karnitschnig have this juicy piece today that divulges all kinds of insider gossip related to Google’s failed negotiations with Viacom to land a content deal for YouTube. However, the real piece of hard news is that talks between Google and another TV content provider, CBS, have ended, unraveling a potential deal that would have allowed YouTube to distribute clips from “The Late Show with David Letterman” and other CBS hits.
That deal also purportedly allowed Google to sell radio ad spots for CBS’s radio stations. (WSJ article is behind firewall but here’s a Reuter’s write-up of the CBS deal break-down).
But, the article is noteworthy because it offers some details about how Google’s negotiations with Viacom foundered. From what I can read between the lines, Google, represented in the talks by Eric Schmidt, kept changing the terms of the deal as it related to technical matters and how ad sales would be handled as Viacom’s financial demands increased. Google apparently offered an initial $500 million ad revenue payment guarantee over “several years.” Viacom purportedly raised this figure to $1 billion, although the company denies that.
The Google folks wisely thought that $1 billion was far too much to pay for content that would probably not generate nearly that amount in ad revenue.
The CBS deal fell through, supposedly, because Google was pushing for a five-year deal and CBS wanted a shorter contract. Moreover, in a clear sign that CBS may have a serious bureaucracy problem, “some CBS division heads were reluctant to sign off on a deal,” the article states.
Despite the failure to procure a big deal, the CBS and Google will continue to work on smaller projects together, the companies say.
Cynthia Brumfield at 9:42 AM|Comments(0)
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