1.4 billion down the drain. Surely Google realizes "youtube" itself is pretty worthless. It's not a particularly innovative interface, it's search infrastructure is just going to get replaced by googles anyways, there's nothing special about it. Certainly nothing worth 1.4 billion.
Google paid for traffic, and the traffic came from the content.
So removing content (and inviting it to shift onto some new upstart) is beyond idiotic. Pay to get a license or fight it in court, but don't remove content.