French government has deferred a deal of $200M between Yahoo and France Telecom/Orange. The deal was about acquiring the share of Daily Motion, also known as YouTube of France, in which Yahoo was seeking to get majority stake of the video website. Government intervened in the deal because it did not want to allow a U.S company to take a controlling power in a French operation.
During the past few weeks, there were rumors all around that there are some issues in the deal between Yahoo and DailyMotion, but no one was clear about the exact situation. Initially it looked like that there are some internal issues between the two parties, for which deal was not reaching to an agreement.
However, a source close to the situation has confirmed that deal is stopped by the French government. A report by Le Monde, a French newspaper also noted some days back that deal has been suspended by Orange due to opposition by the French state. It is worth mentioning here that government also has its 27% share in the telecom company, Orange.
Stéphane Richard, who is head of Orange and expecting to head the French telecom company for another term was also not comfortable with the deal with Yahoo. Despite the failure of the deal, DailyMotion is a challenge now for the government. This is because it is very difficult for DailyMotion to compete YouTube if Orange is itself not willing to invest more.
Video website is going to need a handsome amount of investment in it while Yahoo is not doing it, as it is clear now. The investment could be from a local business or French government. According to estimates, $65 million or €50 million are needed to cushion the video website. Fate of DailyMotion is however also dependent on the quality of services provided, which will be seen in the days to come.