UPDATE: France Telecom To Buy 49% Of Dailymotion As Part Of New Strategy
January 25 2011 - 4:04AM
Dow Jones News
France Telecom's (FTE) Orange Tuesday said it had started
exclusive talks to acquire a 49% stake in French video-sharing
website Dailymotion for EUR58.8 million, as part of its new chief
executive's strategy to team up with content providers to attract
new clients and find alternative sources of revenue.
"This operation once again illustrates the role that Orange
intends to play in the content value chain. Although we are no
longer publishers ourselves, we are strengthening our position in
the fields of aggregation and distribution," said Chief Executive
Stephane Richard, who joined the company in March last year.
The deal should allow Orange to gradually increase its
shareholding in Dailymotion to 100% from 2013, and should allow for
the integration of new business partners, the company said.
Speaking at a press conference, CEO Richard said the deal values
Dailymotion overall at EUR120 million, noting that the price of the
transaction was "very reasonable."
A final agreement is expected in the coming months.
France Telecom said the Dailymotion video platform will address
the increase in its customers' video use across all connected
screens, via internet, WiFi or 3G--and the transaction is also
expected to enable Orange to accelerate its multi-screen strategy
by anticipating the growth in high definition, 3D and continuity
across all screens.
Last week, France Telecom said it will form a joint venture with
Canal Plus Groupe, a unit of Vivendi SA (VIV.FR), to merge its
cinema channels with Canal Plus's movie channel TPS Star.
The latest deals are part of France Telecom's strategy to
establish partnerships with content providers as it seeks to
attract new clients and find alternative sources of revenue.
Since he joined the company, Richard has been shifting away from
the previous strategy of buying up exclusive TV rights to sports
and entertainment and offering that content to its Internet and
mobile clients.
Instead, he is opting to find partners to be able to offer
content to clients without spending high sums.
Since 2008, France Telecom has spent around EUR400 million a
year on buying up content such as exclusive rights for French
soccer games. The strategy, pioneered by former Chief Executive
Didier Lombard, was to lure clients with the promise of exclusive
sports and entertainment shows on their TVs.
But Richard in July last year said the strategy of investing
heavily in exclusive content hadn't helped the group attract new
Internet subscribers.
France Telecom recently also formed a deal with music
downloading site Deezer as well as with members of the French press
to create an online news kiosk.
The group is still looking for a partner to invest in its Orange
Sport channel, which notably shows France's popular Ligue 1
soccer.
France Telecom last week said it would like to strike a similar
partnership for Orange Sport as it has done with Canal Plus, and it
is currently in very early discussions with several interested
parties, including Canal Plus. CEO Richard had previously cited
U.S. sports channel ESPN and the French soccer league as other
interested partners.
- By Ruth Bender, Geraldine Amiel and Thomas Varela, Dow Jones
Newswires;