LONDON — The French conglomerate Vivendi is trying to revamp the fortunes of Dailymotion, a video-sharing website that has long struggled to live up to its early promise as the next YouTube.
Vivendi, which also owns the Universal Music Group, is in talks to buy an 80 percent stake in Dailymotion for about 250 million euros, or about $270 million, from the French telecommunications giant Orange. That was the word from two people briefed on the negotiations, who spoke on the condition of anonymity because they were not authorized to discuss matters publicly.
Vivendi confirmed on Tuesday that it had made an offer for Dailymotion, though the company and Orange declined to elaborate on the proposed deal.
The move comes after a series of interventions by the French government, which owns a 25 percent stake in Orange. Paris has rooted for Dailymotion, which was founded in 2005, as a local alternative to YouTube, which is owned by Google.
But while the French government was an early venture capital investor in Dailymotion, and officials have tried to keep it a French-owned entity — President François Hollande discouraged a 2013 takeover attempt by Yahoo — the company has failed to keep pace with YouTube, its far larger American rival.
Not only are YouTube’s nearly 800 million monthly unique visitors more than six times what Dailymotion attracts, analysts say that Google has been more successful at attracting advertisers and finding other forms of revenue compared with Dailymotion under French ownership. In the United States, for example, about 60 percent of Internet users routinely visit YouTube, compared with just 7 percent who regularly use Dailymotion, according to the data provider eMarketer.
Orange acquired a 49 percent stake in Dailymotion in 2011 at the urging of the French government and bought the remaining stake in 2013. But analysts say the video-sharing site has never been a good fit for Orange’s telecommunications business.
Dailymotion was recently put into play again after a Hong Kong-based conglomerate, PCCW, showed interest in buying a stake in the company. PCCW broke off acquisition talks on Monday after the French economy minister, Emmanuel Macron, voiced doubts over a non-European company’s buying a stake in Dailymotion.
“The French government’s preferred search for a European solution discourages international companies’ participation,” PCCW said in a statement.
Vivendi’s bid for Dailymotion, which was to be discussed at an Orange board meeting on Tuesday afternoon, also has put a focus on the future plans of Vivendi itself.
After selling billions of dollars of telecommunications assets in the last few years, Vivendi is trying to transform itself into a media company based around Universal Music, the world’s largest music company, and the Canal Plus cable television and film group.
“Dailymotion certainly has a sizable audience, but it has definitely not grown as fast as YouTube,” said Thomas Husson, an analyst at the technology research company Forrester Research in Paris. “With Vivendi’s focus on media, this deal could help them offer content on online premium channels that would not be available elsewhere.”
As Europe’s telecommunications industry undergoes an overhaul, Orange has repeatedly said it would prefer an external partner to help develop Dailymotion.
As YouTube has been able to take advantage of Google’s wide reach across the Internet, including through online search, email and other services, analysts also questioned whether Vivendi would be able to use its global operations and exclusive video and music content to help Dailymotion catch up with its larger rival.
“The odds of building a video aggregation and streaming business which can compete with YouTube are low,” said Claudio Aspesi, an analyst at Bernstein. “It is a small deal and, in the end, it is unlikely to move the needle much in terms of the economics.”
While Vivendi, which is based in Paris, looks to secure a majority stake in Dailymotion, the company’s own strategic shift to focus on its media assets is the source of a shareholder revolt.
An American hedge fund, P. Schoenfeld Asset Management, known as PSAM, has called on Vivendi to hand shareholders €9 billion of proceeds from divestments, raise its dividend and sell Universal Music.
Some investors are also challenging the company’s plan to grant double voting rights for long-term shareholders. Vivendi’s management, which has bet the company’s future on its existing strategy, has rejected those demands.
To head off the revolt, Vincent Bolloré, Vivendi’s biggest shareholder and one of France’s richest men, has been increasing his personal stake in the company, and now holds just more than 12 percent, up from 8.15 percent before the challenge. Shareholders, however, are expected to discuss these issues at the company’s shareholders’ meeting on April 17.
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