Just days after Google (GOOG, news, msgs) CEO Eric Schmidt said that media companies will have no choice but to work with online sites such as YouTube, the first of the big media companies has responded — with a $1 billion lawsuit.

Media giant Viacom (VIA, news, msgs) is charging that the video-sharing site, now owned by Google, has shown 160,000 of its videos without permission.

“Their business model, which is based on building traffic and selling advertising off of unlicensed content, is clearly illegal and is in obvious conflict with copyright laws,” Viacom said.

Google spokesman Ricardo Reyes said in a statement that the company has “not received the lawsuit but (is) confident that YouTube has respected the legal rights of copyright holders and believe the courts will agree.” Reyes said the suit would not “become a distraction to the continuing growth and strong performance of YouTube.”

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