Media Points Finger at Google Presented by: Jennifer Hocking and Nikhil Gupta February 13, 2007

Google recently purchased which company for $1.65 billion dollars? A) MySpace B) Facebook C) America Online D) YouTube E) Ebay

Correct Answer: D) YouTube

How many of YouTube’s founders attended the University of Illinois? A) 0 B) 1 C) 2 D) 3 E) 4

Correct Answer: C) 2 Steve Chen and Jawed Karim  Chad Hurley

Google Takes the Plunge October 9, 2006 $1.65 Billion Google: search engine and designer of innovative advertising models YouTube: online video entertainment

Risk YouTube still unprofitable  Counting on future traffic and advertising Most expensive purchase  8-year history  Last year only spent $130.5 million on 15 small companies Lawsuits, copyright issues Staying power?  Napster Comparison

Why YouTube? Greater ability to capture online video and social networking advertising market Competitive edge against news corp.  News Corp. owns MySpace  MySpace controls 30% of video sharing market Ability to integrate video into search results All stock deal  $500 million of $1.65 billion held in escrow (not paid to shareholders) for future copyright infringement lawsuits

Online Video Market Share YouTube – 47% MySpace – 20% Google – 11%

Opportunity to become world’s largest video server network  New era of TV, moving towards internet Increased popularity of site  100 million clips watched per day  65,000 new videos uploaded per day  20 million visitors per month Common financial backing through Sequoia Capital  Early Google investor and 30% YouTube shareholder Other Pros

Recent Growth From , the number of visits increased by the millions.

New Music Partnerships Universal Music Group CBS Corp.  New copyright protection Sony BMG Music Entertainment Warner Music Group

Google Controversy Recent accusations from media companies  News Corp., Viacom, Sony, Walt Disney, General Electric, NBC Universal, and Tim Warner

Measures to Prevent Piracy Removal of ads that companies object to Approved advertisers New guidelines to monitor for key words Training of employees to scan for ads selling piracy

Based on what you have learned about the risks associated with YouTube, do you believe this purchase will make Google a better investment? A) Yes B) No C) Not sure

On Friday, October 6, 2006, Google shares closed at $ with million shares outstanding. After the news of the YouTube acquisition, Google shares closed at $ on Friday, October 13, How much did the Google market cap increase by the end of the week? A) $1.67 billion B) $1.84 billion C) $2.07 billion D) $2.32 billion

Answer: C) $2.07 billion

Worth the risk? Friday Oct. 6 th, 2006  Google shares closed at $ per share  million shares outstanding  Market Cap= $ billion Friday Oct. 13 th, 2006  Google shares closed at $ per share  Market Cap= $ billion  Difference equals $2.07 billion > $1.65 billion

Questions?