French government blamed for Yahoo's failed Dailymotion bid

The head of France Telecom complained on Thursday of interference after the state blocked plans by US Internet firm Yahoo to buy a majority stake in French video-sharing website Dailymotion.

In an interview with business newspaper Les Echos, chief executive Stephane Richard said the firm's management and not the government should be deciding the strategy for Dailymotion, owned by France Telecom, which uses the brand name Orange.

"Dailymotion is a subsidiary of Orange and not the state. It is the company, its management and its board that manages this issue," Richard said.

"I had refused that Yahoo have the option of buying all of Dailymotion and we were on the verge of finding an arrangement," he said.

Yahoo Inc. had been in talks to buy a 75 percent stake in Dailymotion, a leading video-sharing website in Europe. But the government, which holds a 27 percent stake in France Telecom, had insisted on a 50-50 split.

Industrial Renewal Minister Arnaud Montebourg said Wednesday he had met with Yahoo executives and blocked the deal because the US firm was seeking to "devour" the French company.

Montebourg said the government wanted a "balanced" agreement that would allow Dailymotion to retain its identity.

The collapse of the agreement dealt another blow to France's business image, with the outspoken Montebourg at the centre of complaints in the corporate world that France's Socialist government is anti-business.

Richard said France Telecom was now on the hunt for other potential partners to work with Dailymotion, which is seeking to expand its reach.

"Our priority is to find an ally who can help develop Dailymotion outside Europe," he said. "We had looked at more than 60 potential partners in France and abroad before focusing on Yahoo. Now we will restart our search."