Media companies owning a stake in YouTube

In light of the $1.65 billion purchase of YouTube, who wouldn't want a piece of the company? Well, according to a NY Times article, a number of major media companies invested in YouTube before the purchase, and they are in line for a major payoff.

The following music companies got stock in YouTube before the Google Inc. (NASDAQ: GOOG) purchase: Sony, Vivendi, and Warner Music Group.

This was all part of the licensing deals the music companies struck with YouTube to use copyrighted content. These traditional media companies are not stupid. The equity positions are worth around $50 million. Not bad for a couple week's work.

Many analysts and pundits have said that copyright exposure is the death knell for YouTube. But keep in mind that YouTube's major investor, Sequoia, has lots of experience with these matters. After all, the fund was also an investor in MP3.com, which underwent much trauma with copyright litigation.

It looks like Sequoia learned a lot from the experience. This time around, with YouTube, the fund has developed some creative structures to balance content rights and online distribution.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.