France's Orange talks to Microsoft over Dailymotion tie-up

PARIS (Reuters) - Orange(ORAN.PA) said on Tuesday it was in talks with Microsoft(NSQ:MSFT) over a possible tie-up with its video-sharing website Dailymotion, nearly a year after discussions with Yahoo (NSQ:YHOO) collapsed following state opposition.

Orange said it would keep a majority stake in Dailymotion, the world's 12th largest video-sharing site, but is looking for partners outside of Europe to develop it internationally, Chief Executive Stephane Richard told BFM Business radio.

"We have ongoing talks, particularly with Microsoft, which doesn't necessarily mean that we'll come to a deal," said Richard, speaking from the World Mobile Congress in Barcelona.

"I think it makes a lot of sense for us, as for Microsoft, to reach an accord that would be above all a partnership," he said, adding that Orange was also talking with other content providers, including in France.

The French state owns 28.4 percent of Orange, so it has some sway over the group's actions and management.

Last year, French Industry Minister Arnaud Montebourg blocked a plan by US-web giant Yahoo (NSQ:YHOO) to buy a majority stake in Dailymotion.

Montebourg spurred a public row over state intervention in business affairs after he said that the U.S. group wanted to "devour" its smaller rival, calling it a "golden nugget" that needed to be kept in French hands.

Yahoo, which had planned to acquire a 75 percent stake in a deal that valued Dailymotion at $300 million, eventually walked away from the talks, leaving Orange to seek a new strategic partner to develop its video site.

Richard said that Orange was also in talks with other potential tie-partners for Dailymotion, including ones based in France which were focused on creating content.

"For the time being Dailymotion or Youtube are 100 percent free," he said. "But the future of such sites is to make high-quality content available for a charge, which justifies us speaking to content-creators."

(Reporting By Dominique Rodriguez; Writing by Alexandria Sage and Nicholas Vinocur; editing by Mark John)