Citing sources that were familiar with the talks, Broadcasting & Cable said that the talks to create an Internet competitor to YouTube may already be sidetracked before they've barely begun. The various sources said that Viacom (VIA) has already pulled out of the talks as of Tuesday afternoon.
The concept was to create a YouTube (GOOG) rival that would offer television programming from the broadcasters, along with user-generated content. The idea being to start to siphon business away from YouTube, bringing ad business their way while slowing down the YouTube.
The major problem from the beginning was that the companies have competing agendas that would be very hard to come to terms with; and evidently weren't able to. Some of the problems being that certain online properties of the companies would still be in direct competition with one another even with the new Web site.
With Disney (DIS) never part of the talks, and Viacom stepping aside, there doesn't really seem to be any reason for these talks to continue. News Corp. (NWS) already has MySpace, and how much more would they get out of the deal? That leaves only CBS (CBS) and NBC Universal (GE) as the large media companies left.
From this response, it would have been better for the companies not to have even started this, than to have started it and look like they're cutting and running. It does expose the weaknesses that reside within the industry as a whole. I've been saying for a long time that they should have followed Disney's example and just embraced and faced the new realities, rather than continually try to fight and go around them.