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2007

News Corporation and NBC announce new Web deal

In a long-anticipated challenge to Web sites like the popular video-sharing site YouTube, two entertainment giants–News Corporation and NBC Universal–announce a high-stakes Internet venture on this day in 2007.

According to the terms of the deal, News Corporation, owned by the Australian media mogul Rupert Murdoch, and NBC, a unit of General Electric Co., would begin distributing their own programming on popular Web sites such as America Online (AOL), Yahoo, MySpace and Microsoft’s Internet portal, MSN. News Corp. and NBC also planned to make video of TV shows and movies available on a separate Web site. The site would be supported by advertisers and free to viewers, who could edit the available content and post their own, as well as buy downloads of movies made by 20th Century Fox and Universal Studios.

By allowing users to upload and view streaming video, YouTube–which was bought by Google Inc. in 2006 for $1.65 billion–entered into a tense relationship with media companies, who became angry when copyrighted material such as television shows, film clips and music videos turned up on the site without their permission. In the face of YouTube’s enormous success, TV networks were forced to adjust their traditional formula to embrace the rise of new-media technologies. In one particularly notable example in 2006, a YouTube user uploaded “Lazy Sunday,” a clip from NBC’s sketch comedy show Saturday Night Live, that quickly became a sensation online as millions of users viewed it then forwarded it to friends. Initially angry at the copyright infringement, NBC soon realized the potential of the site to drum up awareness of their programming, and soon agreed to add more of its clips to the YouTube library.

The NBC-News Corp. deal in March 2007 represented a larger-scale attempt by the two media companies to exert greater control over the distribution of their video material online. The result of the deal was the online video site Hulu, launched to a selected group of users in the fall of 2007 and to the general public in the spring of 2008. Other media companies have chosen to deal with the challenge of YouTube in a different way. In the spring of 2007, Viacom Inc., the owner of Comedy Central, MTV, VH1 and other cable channels, filed a $1 billion lawsuit against the video-sharing site. The mammoth case was by far the most significant challenge over YouTube’s alleged violation of intellectual property rights to date. In April 2013, a summary judgment was granted in favor of YouTube, but the parties settled in March 2014.

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