“Veoh has shown that when it did acquire knowledge of allegedly infringing material — whether from DMCA notices, informal notices, or other means — it expeditiously removed such material, and UMG has failed to rebut that showing,” stated a court order by the U.S. District Court for the Central District of California. The Court made a ruling against Universal Music Group for its 2007 lawsuit against Veoh Networks Inc. Whenever Veoh received a DMCA takedown notie, they quickly reacted and removed the material.
UMG failed to show an appropriate rebuttal of Veoh’s proactive removal of copyrighted material. Universal said that the ruling was “wrong” and that they plan to appeal. “The balance between copyright holders and technology that Congress sought in enacting the DMCA has been upended by this decision,” stated Universal Music. The Veoh vs. Universal Music lawsuit was closely watched by media companies because Viacom has a pending lawsuit against Google over copyright material being uploaded on YouTube.
Dmitry Shapiro, the founder of Veoh said that the lawsuit was costly and dragged on for two years. Veoh has venture funding from Goldman Sachs, Time Warner, Spark Capital, Intel, etc.
Veoh raised about $70 million in total funding and is not profitable as of yet, but they expected to be by the second quarter of 2010. Veoh is exploring the possibilities of either selling themselves or raising additional investment.
French entertainment company Vivendi has made a bid to acquire GVT, a major Brazilian telecommunications company. If the acquisition takes place, Vivendi would become a major competitor of Telefónica of Spain. Vivendi offered $22.95 per share (42 reais) to gain 100% of GVT’s capital.
According to Vivendi CEO Jean-Bernard Lévy, this acquisition would lift the earnings over the next year and will not affect the credit ratings or dividend policy. Telefónica could counter the bid with a deal of their own. Currently Telefónica has a 31% market share in Brazil.
GVT has a 4% market share with 2.3 million customers and $800 million revenue. GVT’s controlling shareholders are the Swarth Group and Global Village Telecom. They agreed to sell at least 20% of their outstanding shares. Vivendi wants at least 51% ownership.
Rafat Ali at PaidContent has reported that Kohlberg Kravis Roberts & Co. had secretly made a bid of $50 billion for Vivendi. If this deal is to take place, it be the “largest leveraged buyout offer* [LBO] in history [source].” And it wouldn’t be the first time that KKR would be responsible for the largest LBO either.
The 1988 LBO by KKR of RJR Nabisco for $31.4 billion with a net debt of $6.3 billion was the largest price ever paid for a commercial enterprise as well. Then KKR was responsible for a follow-up purchase of HCA Inc. for $33 billion. The purchase of RJR Nabisco was the inspiration for #1 New York Times best-selling book and follow-up movie, Barbarians at the Gate: The Fall of RJR Nabisco (book written by Bryan Burrough and John Helyar).
How is this pertinent for the Web 2.0 world? YouTube could be affected by this transaction. Vivendi SA, the French media conglomerate owns Universal Music. On October 9, YouTube and Universal Music formed a strategic alliance to have unauthorized videos removed and Universal Music agreed to provide videos for YouTube to use legally. Now that another party is getting involved and is potentially buying the parent company of Universal Music, the terms and conditions of the YouTube-Universal Music partnership may change.
However, there isn’t enough information available presently about what would actually happen to the YouTube-Universal Music partnership if KKR does buy Vivendi. For all we know, KKR may or may not intervene.
*Leveraged buyout:
A leveraged buyout (or LBO, or highly-leveraged transaction (HLT), or “bootstrap” transaction) occurs when a financial sponsor gains control of a majority of a target company’s equity through the use of borrowed money or debt. A leveraged buyout is essentially a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital. In an LBO, there is usually a ratio of 70% debt to 30% equity.”
