PARIS--The French government Wednesday urged partially
state-owned telecoms operator Orange SA to explore European
solutions for its video streaming unit Dailymotion before entering
into the final phase of a possible transaction with a Chinese
investor.
The warning issued by the office of French Economy Minister
Emmanuel Macron comes weeks after the management of Orange,
according to people familiar with the matter, told its board it
intended to enter into exclusive talks with Hong Kong-based PCCW
Ltd. over a deal to sell a 49% interest in Dailymotion.
"There can't be exclusive talks," Mr. Macron's spokeswoman
Barbara Frugier said. "Orange must look at all options and take
into consideration what's at stake for Europe's digital
sovereignty."
Orange said Wednesday it continued to talk with potential
investors in a quest to find a partner for Dailymotion.
"We haven't signed any exclusivity deal, all options are open,"
said a spokesman.
Dailymotion is widely seen as an example of a successful French
startup. The company, founded in 2005, has managed to attract
funding and expand globally, but Orange has argued for years that
to catch up with Google Inc.'s YouTube, it needs to find
partners.
Wednesday's move by Mr. Macron's office is the second time the
French government has directly stepped into Orange's plans for
Dailymotion.
In 2013, then-Industry Minister Arnaud Montebourg prevented
Orange from selling a majority stake in the site to U.S. Web giant
Yahoo Inc. After the deal fell apart, Mr. Montebourg said the U.S.
tech firm might have "devoured" a French jewel.
After Mr. Montebourg left the cabinet last year, the French
government signaled it was more open to the idea of a foreigner
joining with Orange in Dailymotion. France's deputy minister for
digital affairs, Axelle Lemaire, has said a new "Dailymotion
affair" should be avoided by all means.
Mr. Macron's spokeswoman said the French government wasn't
intent on banning a deal with PCCW but wished to remind Orange it
should take into account efforts to create a stronger digital
economy in Europe to counter the dominance of U.S. web giants.
"There is no veto," Ms. Frugier said. "This doesn't mean that
the Chinese offer is ruled out."
Write to Ruth Bender at Ruth.Bender@wsj.com
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