• by Wendy Davis , Staff Writer @wendyndavis, October 9, 2006

Will Google buy YouTube? We might know the answer before the end of the day, according to the New York Times blog Dealbook.

Dealbook's reporting that boards of both companies are meeting today to discuss Google's reported $1.6 billion offer for the video sharing site, which launched just 10 months ago.

While $1.6 billion sounds exorbitant for a start-up whose main advantage is a large--but potentially fickle--audience, Wall Street brokerage house Merrill Lynch is (mostly) cheering the deal. In a report issued this morning, analyst Justin Post says the deal is positive on three major factors: Google's ad network could monetize the site, Google itself has a "large and growing" video site, and growth opportunity is large.

The downside, of course, is liability for copyright infringement; users have uploaded numerous clips to YouTube that belong to large, potentially litigious media companies.

But consider, YouTube already has faced angry media companies and has found a way to settle with them in the boardroom rather than the courtroom. The latest deals came this morning, with YouTube forging deals with major labels Universal Music Group and Sony BMG and TV network CBS.

Universal--which recently threatened to sue YouTube for multi-millions--has agreed to make its videos available to YouTube in exchange for a cut of ad revenue; Sony BMG also is going to allow its videos on YouTube, and additionally will let users include some tracks in their own videos.

CBS, meanwhile, will offer short clips for its own CBS channel on YouTube. Content will include news and sports clips as well as clips from prime-time TV programs like "Survivor." Previously, TV network NBC and music label Warner Music struck their own deals with YouTube.

Meanwhile Google also has been busy inking its own video deals. The latest, announced this morning, will allow the company to stream ad-supported music videos from Sony BMG and Warner Music.

With big media companies willing to deal, the prospect of a lawsuit looks less likely. Of course, an independent filmmaker--professional or amateur--can still haul the companies into court for copyright infringement.

But Google surely has the resources to fight off, or at least buy off, the smaller players, should it go through with the YouTube acquisition.