France Telecom Said to Resume Search for Dailymotion Partner

France Telecom SA will resume its search for a partner for the video site Dailymotion SA as negotiations with Yahoo! Inc. collapsed after intervention by the French government, according to a person with direct knowledge of the situation.

Yahoo’s talks to buy a stake in Dailymotion from Paris-based France Telecom had been going on for months, said the person, who asked not to be identified as the discussions weren’t public. French Industry Ministry Arnaud Montebourg pressed for a 50-50 partnership, while Yahoo wanted to buy a majority stake in Dailymotion, the person said. The government is France Telecom’s largest shareholder.

Lauren Armstrong, a spokeswoman for Sunnyvale, California-based Yahoo declined to comment on “rumors and speculation” when contacted by Bloomberg News. France Telecom began looking elsewhere for a partner immediately after the talks with Yahoo ended, and it wants to retain a stake in Dailymotion, the person familiar with the situation said.

The collapse of the talks coincides with efforts by France to attract foreign investors and may raise concern about government conditions. President Francois Hollande called for the Chinese to invest in France in a speech in Beijing last month after French jobless claims rose to a record high of 3.22 million, the 23rd monthly increase in jobseekers.

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France Telecom, owner of the Orange brand, bought its initial 49 percent stake in Dailymotion in 2011 for 58.8 million euros ($78 million), and boosted the holding to 100 percent in January this year. Dailymotion, and partnerships such as a linkup with music service Deezer, were designed to help France Telecom gain access to more content.

France Telecom has been in talks with a number of groups about Dailymotion, Tom Wright, a spokesman, said in an interview today, declining to comment specifically on the discussions with Yahoo or the government’s role.

“For Dailymotion to develop in the future and grow, it needs to find a strong, strategic partner, probably in the U.S. to open the doors to the U.S. market,” he said.

Yahoo had been in talks to buy as much as 75 percent of Dailymotion, which is valued at $300 million, the Wall Street Journal reported in March, without citing a source.

Negotiations between France Telecom and Yahoo stalled after the companies weren’t able to reach an accord, Montebourg said in an e-mailed statement late yesterday. Any deal needs to be “balanced” and beneficial to both companies, Montebourg said.

Montebourg “wants to underscore that the Industry Ministry is keen on creating the optimal conditions for Dailymotion’s international development.”

Phone calls and e-mails to officials at the Industry Ministry went unanswered today, a holiday in France.

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