News Corp, NBC plan YouTube rival

By Paul Thomasch and Michele Gershberg

NEW YORK (Reuters) - News Corp. NWSa.N and NBC Universal said on Thursday they will launch a free online video site this summer, featuring full-length movies and television shows in a challenge to Google Inc.'s (GOOG.O) YouTube.

The move underscores how serious a threat YouTube has become to media companies, which fear losing a new generation of viewers who are as likely to be found in front of computers as television screens. Another media company, Viacom Inc. (VIAb.N), has sued Google for $1 billion (509 million pounds) over unauthorised use of its videos on YouTube.

While NBC and News Corp. compete fiercely for TV and movie audiences globally, their partnership shows the risks executives will take to regain control over content as more consumers turn to YouTube or Apple Inc.'s (AAPL.O) iTunes.

The two companies also enlisted three of Google's largest rivals -- Yahoo Inc. (YHOO.O), Microsoft Corp. (MSFT.O) and Time Warner Inc.'s (TWX.N) AOL -- as distributors of the entertainment on their Web sites. Discussions are ongoing with other Internet companies, they said.

Content will include such popular TV shows like NBC's "Saturday Night Live" and "The Simpsons," and hit films such as "The Devil Wears Prada" and "Borat" from News Corp.'s Fox.

"This is a game changer for Internet video," News Corp. Chief Operating Officer Peter Chernin said in a statement. "We'll have access to just about the entire U.S. Internet audience at launch."

The Internet video market is key to the future of media and will be vast enough to accommodate competition, analysts said. But one area where YouTube is clearly ahead with consumers is in the uploading of home-made videos -- a function that has made the site extremely popular with the younger audience.

"It's still not clear how user-generated content is going to fit in and it's still not clear that all of these companies won't do a deal with Google over time," said Richard Greenfield of Pali Capital.