Following several weeks of rumors, webisode syndicator Next New Networks has been sold to YouTube (NSDQ: GOOG), co-founder and CEO Fred Seibert said in a blog post. As a result of the deal, Seibert will be stepping down.
Terms of the deal weren’t released, but The Hollywood Reporter cited an unidentified source who put the purchase price at under $50 million.
Since its inception, Next New’s programming has been viewed over 2 billion times, the company claims, and built a following of more than 6 million subscribers. It has over 60 video producers, including Barely Political, the creators behind the viral hit from a few years ago, Obama Girl.
Siebert, the former MTVN (NYSE: VIA) and Hanna-Barbera exec who co-founded Next New with fellow MTVN alum Herb Scannell, stepped in for Podell. The latter became CEO two years ago, after Scannell gave up the role and became chairman. Scannell left Next New completely in June to become president of BBC America.
After a restructuring in July 2009, the company experienced a rebound; it reached its one-billionth pageview two months ago.
In February, as deal talks with YouTube were said to be coming to a close, Next New said it was seeking $19.5 million equity financing in an SEC filing.
Next New relied on YouTube as a heavy driver of its programming. In addition to original programming, the deal gives YouTube established video production capabilities, suggesting that it, and by extension, its parent, Google, are ready to embrace the idea of becoming a content company.
In a larger sense, the deal is YouTube’s way to capture the substantial growth for online video as part of its general display advertising plans.
The online video advertising market is rapidly growing: eMarketer estimates US online video ad spending grew 39.5 percent to 1.42 billion in 2010, up from $1.02 billion in 2009. This year, advertisers in the U.S. are expected to spend $1.97 billion on video ads, a 38.6 percent increase over 2010.
The researcher estimates Google earned $855 million in US display advertising revenues in 2010, which includes U.S. video ad revenues at YouTube, up from $280 million in 2009. Google’s share of the overall $8.88 billion US online display ad market increased to 9.6 percent last year, up from 3.6 percent in 2009, eMarketer notes. This year, eMarketer estimates overall display spending will grow 14 percent to $10.1 billion.