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;