As was widely reported last month, Yahoo had supposedly been in ongoing talks with Orange to take a majority stake of 75% in Dailymotion, the 31st ranked site globally. However, now comes the news from Le Monde that the talks have abruptly come to an end. It’s well-known that Orange had been searching for a while for a partner for Dailymotion to help it finally gain more traction internationally, particularly in the US. It also seemed that ceding the majority of Dailymotion in an effort to quickly expand abroad and/or eventually off-loading the video site, were both options Orange was seriously considering. It appears though that the French government, who still owns +27% of Orange-France Télécom, was having none of that.

Le Monde quoted a source from Bercy, France’s Finance ministry, who more or less said about the potential deal “Dailymotion is one of the rare content companies from France that succeeded in on the web in recent years..it’s a gem and, more over, doesn’t lose money. It would be a real shame to let it go.” Orange’s CEO Stéphane Richard must have also received this message (albeit a lot sooner) and dutifully backed away from the deal not wanting to create a public disagreement with the government. The rationale he gave was that Yahoo stated upfront that they wanted at least a big majority stake in the video site and weren’t at all interested in a minority stake. This was essentially because Yahoo wanted full reign to completely integrate Dailymotion with their content. Richard stated that the search for an international partner continues and that Orange is still in talks with other (but still unnamed) american companies.

My normal inclination would be to howl about how the government should have kept out of this and let the two sort out on their own whether it made sense to do the deal of not. However, in this case, the state is still a major shareholder in Orange so, as such, should arguably have a some say. Perhaps the better question is whether it makes sense for the state to still be a shareholder in Orange at all. Who knows if the deal Yahoo was proposing was, on its own merits, good or not? It appears that largely political motivations stopped discussions from getting far enough along to even do a fairly assess this. Regardless of what their management says, there aren’t very many potential partners out there that have the scale to help Dailymotion to finally achieve their international (read US) ambitions. So now Orange is back to square one. Just another big, challenging problem to add to their long list.