MTV Can't Rock Google

Google (GOOG Quote - Cramer on GOOG - Stock Picks) may have gotten its MTV, but investors don't seem too excited.

The largest search engine and MTV parent Viacom(VIA Quote - Cramer on VIA - Stock Picks) are planning to test video advertisements. Starting next month, Internet publishers will be able use clips of shows such as "SpongeBob SquarePants" with commercials embedded in them on their Web sites and blogs. Google also will sell downloadable episodes of MTV programs to expand the cable network's reach on the Web and give Google an additional source of advertising revenue.

Shares of Viacom, down 15% for the year, fell 12 cents to $34.25, while Google was up $3.93 to $377.78.

"If this same announcement was made a year ago, the shares would have been up meaningfully," says Ben Schachter, an analyst with UBS, who rates Google shares neutral, in an interview.

Scott Kessler, an analyst with Standard & Poor's, who raised his rating on Google to buy from hold, adds: "I can't remember when this type of news was greeted with such a resounding yawn."

Investors may not be keen on the partnership since it isn't exclusive. Viacom already has a similar arrangement with Time Warner's(TWX Quote - Cramer on TWX - Stock Picks) AOL and is interested in pursuing others, says Michael Wolf, MTV Networks chief operating officer.

Still, MTV believes that Google will help it expand its audience more efficiently than it could have done otherwise, he says, adding that many details are still being worked out, including whether the ads will be at the beginning or the end of the clips.

The companies plan to rotate the clips to encourage repeat viewing. Rafat Ali, of the PaidContent.Org site, argues that this will make it difficult for publishers to generate buzz for their sites because users won't be able to share videos with their friends.

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