AOL Chief Executive Jonathan Miller said on Wednesday that he expects Internet video-sharing Web site YouTube.com to overcome its business and piracy issues, and be acquired by a larger media company.
Such a deal could turn around the fortunes for the acquirer, much like how News Corp.'s
It is possible that YouTube could take somebody from last to first, Miller said in an interview after speaking at a Technology Review emerging technologies conference at the Massachusetts Institute of Technology.
But YouTube, one of the Internet's most popular destinations for viewing home videos and TV show clips, has run afoul of some program owners as contributors put unlicensed versions of copyrighted video on the site.
Universal Music Group, controlled by Vivendi
Miller declined to say whether AOL was interested in buying YouTube or comment on whether rivals were pursuing such a deal.
The year-and-a-half old YouTube might already be too expensive for AOL, the online division of Time Warner Inc.
Dick Parsons, chief executive of AOL's corporate parent, recently told the Financial Times that current valuations on YouTube, along with social networking site Facebook, are too high.
Valuations that are put on those businesses that currently make no money are astronomical and you have to have a big leap of faith, the newspaper quoted Parsons as saying in its Friday edition.
Miller said he does not expect YouTube to remain an independent company, saying that it could be acquired at any time. Everyone recognizes that YouTube is a true phenomenon.
He added that he thinks YouTube's board would consider taking the company public, but that the company needs to overcome two key business challenges to make it a desirable investment.
YouTube must find a way to co-exist with copyright holders who own some of the video content that's published on the site so it can avoid suffering the same legal fate of music file-sharing site Napster, he said.
It also will need to figure out how to start generating substantial revenue from the site's traffic.
YouTube likely will be successful in overcoming both hurdles, he said.
Miller also said that AOL is committed to expanding overseas and expects to start up operations in India before the end of the year.
The company is eyeing China, he said, but plans to be cautious before entering that market, which has proven to be tougher than expected for its rivals.
YouTube was not immediately available for comment.
We're trying to be careful and smart, he said.
Time Warner shares briefly touched a new 52-week high, but closed down 1 cent to $18.59 on the New York Stock Exchange.
(Additional reporting by Kenneth Li.)