The deal will help China's largest search engine launch an online video business.
Baidu, the leading search engine in China, will receive a $50 million investment from a U.S. private equity firm to help fund Baidu's new online video company.
In a joint statement released Friday, Baidu and Providence Equity Partners said the money would be used to build Qiyi.com into an advertising-supported business that provides "premium licensed content."
Under the deal, Baidu will continue to hold a majority interest in the video company, which is entering a market with "great potential for growth in China," Baidu said.
"Providence is our ideal partner in this space as it has rich experience in investing in and managing businesses that distribute licensed content online," Robin Li, chief executive of Baidu, said in a statement. "With Baidu's strong ability to drive traffic and offer innovative products that suit user needs, we are very excited about the future prospects of this new company."
Baidu's success in China is partly due to its close ties with the Chinese government, which controls the media. The new company will also work closely with regulators.
"The new venture will provide users with a first-class viewing experience, and will work with regulators to ensure the lawful distribution of professionally produced media and entertainment content on the Internet," Jonathan Nelson, chief executive of Providence, headquartered in Providence, R.I., said.
Baidu's strength in the Chinese market grew in China with the announcement last month that chief rival Google would no longer censor search results on the Chinese version of its Web site. The decision is expected to end the company's presence in China.
The decision followed a highly sophisticated cyberattack on Google's corporate infrastructure in December that resulted in the theft of Google's intellectual property. Details about the theft were not disclosed.
The attacks have been linked to two Chinese schools, Shanghai Jiaotong University and the Lanxiang Vocational School. The Chinese government has denied any involvement in the attacks.
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