By Ruth Bender and Sam Schechner
PARIS-- Orange SA is set to enter exclusive talks with Hong
Kong-based PCCW Ltd. to sell a stake of about 49% in Dailymotion,
according to people familiar with the matter, after years of trying
to sell a stake in the video-streaming site.
Orange has informed its board that it plans in the coming days
to sign an agreement on exclusive negotiations with PCCW over a
deal to bring in a large foreign investor to help expand
Dailymotion globally, the people said.
PCCW, the telecom company controlled by Richard Li, the son of
Hong Kong tycoon Li Ka-shing, made an offer valuing Dailymotion at
about EUR250 million ($264.5 million) including debt, one of the
people said. The exclusive talks are expected to run for about 45
days, the person said.
A PCCW spokesman declined to comment. An Orange spokesman said
the company is still talking to several different partners and
hasn't entered exclusive talks with any of them.
If the talks conclude, Orange would find itself with a
heavyweight shareholder on its side to help it broaden
Dailymotion's reach, after a plan to sell a large chunk of the
video streaming site to Yahoo Inc. was scuttled in 2013 by the
French government.
Besides being Hong Kong's dominant telecommunications operator,
PCCW also owns media activities, including Hong Kong pay TV service
now TV, digital music streaming site MOOV and a pay-for video
streaming website called Now.com.
"Dailymotion is already popular in Asia and so this is a natural
expansion for them," said one of the people familiar with the
matter.
The prospect of a deal follows years of uncertainty over the
future of the French video-streaming site, which is widely seen as
an example of a successful French start-up.
Dailymotion was founded in 2005--around the same time as Google
Inc.'s YouTube. Similar to some other French startups, such as
music service Deezer and online-advertising company Criteo, the
video-streaming site has gained global scale and attracted
funding.
But Dailymotion has remained far smaller than YouTube in terms
of audience and revenue, and Orange has hunted for a partner to
help expand the site for at least two years.
In early 2013, Orange came close selling a majority stake in to
Yahoo 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.
In the meantime, the French government has shifted its stance,
signaling that it is more open for Orange to sell Dailymotion to a
foreigner. France's deputy minister for digital affairs, Axelle
Lemaire, has said that she was open to finding new investors and
that a new "Dailymotion affair" must be avoided by all means.
Orange has since held talks with a variety of potentially
interested partners but changed its stance several times over
whether to sell only a minority stake or control of
Dailymotion.
After insisting for a year that it was seeking partners to sell
a minority stake, Orange's Chief Executive Stéphane Richard said
last November the group was also open to selling control. He then
said the company still hadn't decided on the future business model
for Dailymotion, a choice that would essentially determine who to
pick as partner.
Mr. Richard said one option was to develop the site as a free
service and expand in other markets. Another could be to turn it
into a paid-for platform, which would call for tying up with a
company that has content, he said.
Write to Ruth Bender at Ruth.Bender@wsj.com and Sam Schechner at
sam.schechner@wsj.com
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