In outmaneuvering Yahoo to buy YouTube, search giant Google is declaring its intention to become Hollywood’s online partner of choice.
Led by former movie mogul Terry Semel, Yahoo has spent the past two years hiring show-business executives and opening a big Santa Monica campus to build on its early lead in connecting Web surfers with music, movie trailers and TV clips.
Yahoo had placed its own bid for YouTube, hoping to guard its turf in online entertainment. But Google snapped up the popular site for watching and sharing online videos.
In addition to filling Google’s void in online entertainment, the proposed $1.65 billion acquisition would give the search giant inventory for display and video ads, an area in which it has trailed Yahoo.
“It certainly looks as if Yahoo is the real loser in this,” Needham & Co. analyst Mark May said. “They can now be considered a major laggard in the online video category.”
Analysts said Yahoo’s failure to acquire YouTube was the latest in a string of missteps that has widened the competitive gap with Google.
In the past few months, Google has bought YouTube, signed content distribution deals with Viacom Inc. and record labels, and signed on as the advertising broker for News Corp.’s Fox Interactive Media, owner of social-networking site MySpace.
Meanwhile, Yahoo delayed the launch of a new search-advertising system designed to better compete with Google, then warned of a third-quarter revenue shortfall. It acquired a small video-editing firm, Jumpcut, but failed to consummate its courtship of the two biggest Internet communities still available: YouTube and Facebook.
The stock valuations of the two companies reflect their divergent momentum: Google is worth $130 billion, compared with Yahoo’s $34 billion.
A Yahoo spokeswoman would not comment on the YouTube deal, but said Yahoo was not ceding any ground to Google in show-business relationships.
