Yahoo in Talks to Buy Controlling Stake in France Telecom Video Site Dailymotion (Report)

6:04 AM PST 03/20/2013 by Georg Szalai

The deal, which could be worth $225 million for a 75 percent stake, would be CEO Marissa Mayer's first major acquisition since taking over the Internet giant.

Yahoo is in talks to acquire a controlling stake in Dailymotion, the online video site owned by France Telecom, the Wall Street Journal reported.

The deal would be Yahoo CEO Marissa Mayer's first major acquisition since taking over the Internet giant last year. It would help Yahoo boost its presence in the online video space outside the U.S. where it has been looking to grow.

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Dailymotion is the 12th-largest video site in the world with 116 million unique visitors in January, the Journal said, citing data from research firm comScore. In the U.S., Dailymotion ranks 22nd in terms of unique viewers.

The site last year struck a syndication deal with Yahoo to make its videos available on sites owned by the U.S. Internet firm. Mayer used to work for Google, the owner of online video powerhouse YouTube.

Yahoo could buy as much as a 75 percent stake in Dailymotion in a deal that could value it at around $300 million, The Journal cited a source as saying. A deal may set up Yahoo with a chance to acquire the rest in the future.

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Spokespeople for the companies declined to comment.

"One of the challenges in Yahoo's business is that we are primarily domestic, and we don't have enough of our business running it from an international basis," Mayer said at an investor conference last month. She has mentioned the U.K. and Germany as possible targets for growth.

Meanwhile, France Telecom has in the past mentioned it would like to find a U.S. partner for Dailymotion to ensure growth. The telecom giant had acquired a 49 percent stake in 2011 and took full control earlier this year for a total price of $164 million.

Pivotal Research Group analyst Brian Wieser said Wednesday he would withhold judgment on the merits of a transaction until further information arises.

"At face value, Dailymotion's legacy business would seem to be of limited value to Yahoo," he said. "Certainly Yahoo could continue growing it, applying their sales team's capabilities (bundling more video inventory with their sales), their ad exchange and content acquisition capabilities to build on top of what presumably is by now proven technology."

But, he added, "Dailymotion appears to be increasingly more than just a French YouTube, and much more than what consumers see directly ... It would seem that the motivation behind any interest in Dailymotion goes beyond buying a site featuring proverbial "cats on skateboards."

For example, last year, the company launched a product called Dailymotion Cloud, characterized as a competitor to Brightcove, a "cloud-based service providing brands, publishers, advertisers, broadcasters and other partners with a powerful suite of tools to instantly stream content online," he highlighted.

"Similarly, Dailymotion has launched a publisher network with thousands of partners," Wieser said. "Such an initiative may also present Yahoo with some unique competency."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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