2nd UPDATE: France Telecom Moves Ahead With Content Strategy
January 25 2011 - 10:51AM
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 news of the exclusive talks with Dailymotion comes less than
a week after 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 group recently also joined forces with music downloading
site Deezer as well as with members of the French press to create
an online news kiosk, all part of an effort to offer clients better
deals at a time when data traffic on the Internet is exploding,
mainly due to consumers watching more and more videos on social
networks.
The French telecoms group said it will set up a separate but
wholly-owned unit to regroup all its new content activities under
one helm.
In the future, France Telecom could consider offering clients
packages that combine content from Dailymotion and Deezer for
example, CEO Richard said at a press conference in Paris.
The deal with Dailymotion, the world's second-largest online
video site, will help France Telecom meet the sharp rise in
customer's video consumption across various platforms, including
3G, wifi and Internet.
"The capacity to manage the traffic and quality of videos will
become essential. Around two thirds of our networks will be used up
by video traffic, it's the channel of the future," said
Paul-François Fournier, executive director at France Telecom in
charge of audience and advertising.
Richard said the deal values Dailymotion at EUR120 million,
noting that the price of the transaction was "very reasonable."
The agreement 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.
France Telecom is open to other partners joining its alliance
with Dailymotion, Richard said.
"We could have an American partner that helps Dailymotion
develop in the U.S.," Fournier added, speaking on the sidelines of
the conference.
Investment fund Advent Venture Partners said it will keep a
"significant stake" in Dailymotion. "We will remain on the board of
the company and help the business to continue on its strong growth
path," general partner Peter Baines said in an emailed
statement.
French sovereign fund, Fonds Strategique d'Investissement, which
invested in Dailymotion in 2009 to support its global expansion,
said the deal with France Telecom will help Dailymotion reach more
clients via different platforms, including mobile and tablets.
France Telecom said a final agreement with Dailymotion is
expected in the coming months.
- By Ruth Bender, Thomas Varela, and Geraldine Amiel, Dow Jones
Newswires; +33 1 40 17 17 54; ruth.bender@dowjones.com