By Ruth Bender
BARCELONA-- Orange SA is open to letting an outsider take
control of Dailymotion as the French telecom operator revives its
quest to expand the video streaming website.
"Keeping control of Dailymotion is not something I'm religious
about," said Orange Chief Executive Stephane Richard in an
interview on the sidelines of the Morgan Stanley TMT Conference in
Barcelona. "What I want is to make sure we select the best future
business project with a possible co-investor."
Orange is again talking with Microsoft Corp, which has in the
past shown an interest in taking a minority stake in the video
company, along with others, according to the executive.
Mr. Richard's comments mark a shift from Orange's previous
stance of wanting to retain control of the online video site, that
in France is seen as one of the rare examples of a French startup
success.
Founded in 2005--around the same time as YouTube--Dailymotion is
one of a handful of French startups, including music service Deezer
and online-advertising company Criteo, that have managed to gain
global scale and attract funding. Orange took control of it in
early 2011.
The former French telecom monopoly has been looking for partners
to help expand Dailymotion for over a year in a bid to create a
stronger rival to Google Inc.'s YouTube but efforts ran have been
complicated by political opposition in France. In early 2013,
Orange came close selling a majority stake in Dailymotion to Yahoo
Inc. to buy a majority stake but the deal fell apart after
then-industry minister Arnaud Montebourg stepped in to oppose a
takeover, later saying the U.S. tech firm might have "devoured" a
French jewel. The French state owns a 27% stake in Orange.
The intervention spooked other potential suitors and left Orange
looking to sell only minority stakes.
Since then, however, the political climate appears to have
changed. France's deputy minister for digital affairs, Axelle
Lemaire, told French radio earlier this month that she was open to
finding new investors and that a new "Dailymotion affair" must be
avoided by all means.
"Dailymotion is no longer considered a political symbol by the
French government, which allows us to consider options in a more
relaxed way," said Mr. Richard.
Mr. Richard said Microsoft, which could help distribute
Dailymotion via its operating system, has been considering buying a
stake of around 10%. A Microsoft spokeswoman declined to
comment.
Vivendi SA's Canal Plus in the past has sought to buy a
controlling stake, according to a person familiar with the matter,
but ran into a roadblock.
The key question Orange is grappling with is what it wants
Dailymotion's future to look like, which will determine the choice
of a potential buyer or partner, according to the CEO. One option
would be to develop the site as a free service and expand in other
markets. Another route could be to develop it into a paid-for
platform, which would call for tying up with a company that has
content, Mr. Richard said. Orange hasn't decided which way the
pendulum is swinging, he said.
Signaling that he wants to make sure Dailymotion keeps its
French heritage even if it moves into the hands of a foreigner, Mr.
Richard said he would make sure a buyer would commit to keeping the
decision-making center and research and development in the country.
Orange would likely stay a shareholder of Dailymotion to guarantee
that happens, he said.
If Orange fails to find a suitable buyer, it could decide to
take Dailymotion public, Mr. Richard said.
"There is a considerable gap with You Tube, so Dailymotion needs
to develop fast."
Sam Schechner contributed to this article.
Write to Ruth Bender at Ruth.Bender@wsj.com
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