The deteriorating U.S. economy and
slumping stock prices will frame discussions among top media
and technology executives at the 26th annual Allen & Co confab
in Sun Valley, Idaho, next week.
Talk of deals, investment picks and hot start-ups will
still work their way into the meeting -- especially since
attendees include News Corp's (NWSa.N) Rupert Murdoch, Google
Inc's (GOOG.O) Eric Schmidt and Yahoo Inc's (YHOO.O) Jerry
Yang.
But the tenor of the gathering -- renowned for being the
birthing ground of big media mergers such as Walt Disney Co
(DIS.N) and Capital Cities/ABC in the mid-1990s -- will be
decidedly somber.
Rising oil prices, a global credit crunch, housing market
difficulties and the impact of slack consumer spending on the
advertising market will likely inform lunchtime chatter by the
duck pond at the Sun Valley Lodge.
"The big issue is how bad is the economy and how bad is the
consumer and what happens to consumer-sponsored companies,"
said media investor Mario Gabelli, a fixture at the annual
event.
Globalization, a recurring theme of years past, will take
on new emphasis, as growth-strapped U.S. media companies chase
opportunities overseas and vice versa. Steven Spielberg, for
instance, is looking to Bollywood for financing and is said to
be close to a $600 million deal with India's Reliance ADA.
Another topic will be U.S. politics, with the presidential
election in November and Democratic candidate Barack Obama seen
to be taking a more aggressive approach on enforcing antitrust
laws should he be elected.
One of the reasons Microsoft Corp (MSFT.O) withdrew its
offer to buy was an anticipated delay in obtaining
regulatory approval ahead of a new administration, one source
told Reuters earlier this week.
MERGERS AND SPLITS
The six-month Microsoft-Yahoo deal debacle, which has seen
just about every permutation of courtship among media and
Internet companies, will be in the minds of many.
Besides Yang, President Sue Decker will be in
attendance, as will Time Warner Inc (TWX.N) Chief Executive
Jeffrey Bewkes and Disney CEO Robert Iger.
Microsoft CEO Steve Ballmer is not expected to attend due
to a prior engagement, but deal-maker Henry Vigil, Microsoft's
senior vice president of strategy and partnership, is expected
to be a guest, as will recently retired Microsoft Chairman Bill
Gates and his wife Melinda.
Google's Schmidt and co-founders Larry Page and Sergey Brin
are expected to hold court. 's Internet search
advertising deal with Yahoo now faces a formal regulatory
review.
Viacom Inc's $1 billion copyright infringement lawsuit
against Google was the talk of the conference last year after
top executives of both fired salvos in the press. It will
probably take a back seat this time, with Viacom Executive
Chairman Sumner Redstone expected to skip the 2008 pow-wow.
That would leave the chiefs of Redstone's Viacom split-offs
-- Viacom Inc's (VIAb.N) Philippe Dauman and CBS Corp's (CBS.N)
Leslie Moonves -- to tussle among themselves.
A 2006 move to split apart Viacom's cable and movies
division from its broadcast arms was hailed by Redstone as the
end of big media conglomerates. But the open warfare between
the two companies has sparked questions about the decision.
Viacom recently ended an agreement to supply films to CBS's
Showtime Networks to launch a rival premium television network
with Metro-Goldwyn-Mayer and Lions Gate Entertainment Corp
(LGF.N).
That move and the stock prices of CBS and Viacom -- which
have fallen more than 30 percent since the beginning of the
year and which are now worth less than their pre-split levels
according to Bernstein Research estimates -- have Wall Street
wondering whether Redstone miscalculated.
But hope springs eternal. In the spirit of the conference,
at least two attendees are betting that entertainment company
mergers in a rapidly growing sector will fare better.
Video game publisher Activision Inc's (ATVI.O) CEO, Bobby
Kotick, and Vivendi () CEO Jean-Bernard Levy will be
taking their victory lap at the conference, with the estimated
$10 billion creation of Activision Blizzard expected to close
next week.
(Editing by Gerald E. McCormick)
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