Will harsh economic times dampen deal-making enthusiasm at the annual Allen & Co. conference? Don’t count on it, experts tell TheWrap
“A billionaire, a media mogul and a CEO walk into a bar” may sound like the start of a bad joke, but it’s more fact than fiction as top-level executives flock to Idaho this week for investment firm Allen & Co.’s annual Sun Valley Media Conference.
The long-running event — which brings together high-powered kingmakers and lever-pullers across the technology, media and entertainment sectors including Rupert Murdoch, Warner Bros. Discovery CEO David Zaslav, Apple CEO Tim Cook, Meta CEO Mark Zuckerberg, Tesla and SpaceX CEO Elon Musk, current Disney CEO Bob Chapek among others — officially kicks off Wednesday amid tumultuous times.
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Unlike years past when seeds were planted for major industry shake-ups such as Disney’s 1995 acquisition of CapitalCities/ABC and Amazon’s MGM takeover last year, this year’s event is haunted by a plunging stock market, record inflation, Wall Street’s dramatic 180 on streaming’s business model, the cryptocurrency crash and the threat of a recession.
Who’s invited to the Sun Valley Media Conference?
The annual event is nicknamed “summer camp for billionaires” for good reason. A who’s who of big names from across Hollywood and Silicon Valley populate the invite list every year.
The guest list also includes Paramount Global chair Shari Redstone, CAA honchos Bryan Lourd and Chris Silbermann, Fox CEO Lachlan Murdoch, Amazon’s Andy Jassy, Alphabet’s Sundar Pichai, Netflix co-CEOs Reed Hastings and Ted Sarandos, marketing and talent management mogul Casey Wasserman, Liberty Global CEO Mike Fries, Sony Group Corp. CEO Ken Yoshia and PlayStaytion head Jim Ryan and more.
“The direct access to each other allows executives to share a collective vision faster, draw that collective vision faster, and get to the point faster,” Ian Greenblatt, J.D. Power’s managing director and GM, tech/media/telecom Intelligence, told TheWrap. “And they get to do this because their infrastructure isn’t there with them acting as gatekeepers.”
Despite the highest of profiles, the event operates in a “cone of secrecy.” Security is tight around the Sun Valley Resort, which will host panels and power lunches while serving as the central hub for outdoor activities as media moguls mix business with recreation. Likely due to the sensitive nature of executive talks, media access is limited.
The potential major deal discussions
The S&P 500 just completed its worst first half of the year since 1970, with drops of more than 20%, while the NASDAQ has fallen 30% and the Dow is down 15% thus far in 2022. As a result of the ongoing financial pinch, some industry skeptics have wondered how active deal talks may be this year at Sun Valley. Yet opportunity always lurks around the next corner even in volatile periods.
“The curtailment of some production activity indicates a bit of exhaustion with chasing other streaming players,” Dale Wettlaufer, CEO of Charlotte Lane Capital, told TheWrap. “Generally, mergers and acquisitions pick up as frustration levels rise or when arrogance is off the charts — it’s bimodal. That, and depressed valuations, will give rise to at least some deal discussions at Sun Valley.”
The conference is designed with the goals of the guest list in mind: an opportunity for company leaders to fortify their positions by seeking out strategic ways to grow and secure their customer bases. Ironically, the financial downturn may actually help spur more talks this year.
“These entities are arriving in Sun Valley with lots of cash on the books and the opportunity to make either transformational buys or model securing buys,” Greenblatt said. “There’s opportunity here — because share prices are down and cash is still cash — to find something that four months ago was too expensive and this week isn’t.”
Deal discussions to keep an eye on
Given the uneven state of television across cable (declining) and streaming (suddenly out of fashion), the medium is expected to garner more focus at this year’s conference.
“You have to be more of a mystic than a business person to figure out how to proceed in this industry right now,” Paul Dergarabedian, senior media analyst at Comscore.
“It’s interesting that as the theatrical movie experience becomes more stable, the small screen world is looking like the Wild West,” Dergarabedian added. “Disruption is always happening in one area of this business, while another area equalizes.”
To that point, Netflix execs Hastings and Sarandos’ company boasts both cash and debt. There’s also that nasty business of Wall Street erasing $200 billion in Netflix value after the company’s disappointing first-quarter earnings results. Netflix is now viewed by some as a hunter looking to make a splashy, confidence-replenishing move. (There have been whispers the company is interested in acquiring Roku; realistic or not, Roku is expected to draw interest at the conference from a plethora of suitors). Others may see Netflix as a potential takeover target if the tough times continue, especially with the company’s market cap so low.
Comcast, which owns NBCUniversal, has billions of dollars in the bank as it weighs whether to be a buyer or a seller in the media space. The company previously missed out on big deals for WarnerMedia and Fox. Now may be the time to either get out or pull the trigger on a move aimed at scaling the NBCU business as the streaming wars heat up.
Apple has oodles of cash on hand, as always. A marquee acquisition to feed Apple TV+ with a much-needed library of content could also repatriate value to shareholders and remove competitive roadblocks.
Outside of dealmaking, Sun Valley drama also comes from grouping together a roster of high-powered individuals who don’t always get along with one another. Reported tension between Iger and Chapek, who just received a new three-year deal from Disney, has made a potential Idaho reunion a source of great interest throughout the industry. However, despite the close proximity to the 4th of July, don’t expect any fireworks.
“Egos always have and always will be a part of this industry, but top execs know that, overall, it’s about the bottom line,” one media insider told TheWrap.
Indeed, the Sun Valley-bound executives are expected to maintain the sort of mission-focused discipline that landed them the corner office in the first place. “These are very dynamic leaders who seek to control the news cycle at important times,” Greenblatt said. “When they do that in a positive fashion, it has very positive effects for the company and its shareholders. That’s why they want to secure these cycles following this momentous gathering of high net-worth individuals.”