Google-Brightcove Acquisition Rumors Surface, Get Sunk

9/16/09Follow @wroush

A report today that Google is in talks to acquire Cambridge, MA-based video hosting company Brightcove met with curt no-comment reactions from both companies, and has been flatly contradicted by one analyst.

The report, which surfaced on Twitter Wednesday afternoon, came from Mark Glaser, a San Francisco-based freelance technology writer who is also executive editor of Media Shift, a PBS-hosted blog on digital media. Glaser wrote: “Source with knowledge of deal tells me video service Brightcove in talks with Google about buyout in $500m to $700m range.”

But Dan Rayburn, an analyst at market research firm Frost & Sullivan who follows the online video industry, reported on his Business of Video blog later in the afternoon that Glaser’s report was wrong. “I received a call from one of the parties involved in the Google/Brightcove rumor who would not talk on record but confirmed with me that the rumor that Google is buying Brightcove is in fact false,” Rayburn wrote. “I won’t say which side, Google or Brightcove the employee is from, but it’s someone I trust.”

No further details of the alleged talks between Google and Brightcove appear to have surfaced, and the companies themselves haven’t confirmed or denied the rumor. “We aren’t commenting on the rumors,” Kristin Cronin, a spokesperson for Brightcove, told Xconomy. “We don’t comment on rumor or speculation,” said Andrew Pederson of Google’s corporate communications office.

If Google were to acquire Brightcove, it would be a spooky repeat of recent history—because last year, a Silicon Valley-based search giant really did take over a video hosting company based in Cambridge’s Kendall Square. Alas, Yahoo’s February 2008 acquisition of Maven for $160 million didn’t go well: Yahoo closed down Maven’s hosting service in June, and has dispersed former Maven employees to other divisions of the company.

Brightcove’s investors would likely welcome an exit scenario of the type Glaser described. The company has raised $91 million in venture capital to date from a group that includes Accel Partners, AllianceBernstein, Allen & Company, America Online, General Catalyst Partners, the Hearst Corporation, IAC/Interactive Corp., Maverick, Transcosmos, and the New York Times Company. A notional $700 million purchase would bring investors a return of almost 8x.

But the 160-employee company has had plenty of work to keep it preoccupied. It rolled out a simplified version of its video hosting platform last October and announced a major partnership with Adobe in April. When I talked with CEO Jeremy Allaire last fall, he said the company’s revenues grew by a factor of 5 in 2007 and a factor of 3 in 2008 and that he expected Brightcove to reach financial independence in 2009. And the company has now reached that goal, as Rayburn reported in June; it’s cash-flow positive and expects revenues of $80 million this year.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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