Media moguls to gather in Sun Valley amid streaming and economic hardship – Deadline

The mountains are more magnificent than ever, the business climate is not so much as investment bank Allen & Co. prepares to hold its annual Sun Valley retreat. After the arrival of the guests on Tuesday, the official activities begin on Wednesday.

The annual ritual of white-water rafting and store talks is a 40-year tradition, after the 4th of July. It was suspended in 2020 during the worst of Covid, but returned last year in a stripped down, masked and vaxxed version shortly after two major deals were announced – the Warner Media/Discovery merger and the planned takeover of MGM by Amazon. Discovery’s then-CEO David Zaslav’s first comment to the Sun Valley press executive a year ago: “We’re not done yet.

Now he’s managing director of the new Warner Bros. Discovery and will likely be more circumspect as the heavily indebted company tries to achieve the promised $3 billion in savings and, along with its peers, weather a brutal stock market, a Wall Street flip-flop on streaming, surging inflation, soaring interest rates and possibly an impending recession. Zaslav’s presence is confirmed, as well as that of WBD’s director of revenue and strategy, Bruce Campbell, we learn.

Those two deals rocked the media in a rush over who lost and what might be next. Paramount (known a year ago as ViacomCBS) wanted a big deal, as did NBC Universal’s parent Comcast. Both had eyed Warner Media. Shari Redstone, non-executive chairman and majority shareholder of Paramount, will return. CEO Bob Bakish has been invited but cannot come.

Fox CEO Lachlan Murdoch and COO John Nallen are confirmed. The same goes for Ken Yoshida, CEO of Sony Group Corp., and Jim Ryan, head of PlayStation. Casey Wasserman and Mike Fries too.

Not all guests are necessarily present. But Rupert Murdoch is a regular and Bob Chapek – a new three-year contract now underway – was there last year. Guests also include tech CEOs, including Elon Musk, Apple’s Tim Cook, Meta’s Mark Zuckerberg, Amazon’s Andy Jassy and Alphabet’s Sundar Pichai. The list includes an array of high-profile media chiefdoms — companies that could or would bank with Allen & Co. — and executives from client companies.

By putting executives in close proximity and in khaki, the Sun Valley conference is credited with sowing the seeds of mergers – from Disney’s purchase of CapitalCities/ABC in 1995 to the founder’s acquisition of The Washington Post. Amazon Jeff Bezos in 2013.

For guests Reed Hastings and Netflix co-CEO Ted Sarandos, the year since Allen & Co. 2021 has made a huge difference. Its stock has fallen 70% year-to-date after losing subscribers last quarter for the first time, announcing it would lose more in the just-ended June quarter and suddenly unveiling plans to launch an ad-supported service even as it lays off staff. As a result, Netflix is ​​increasingly seen as a takeover target – an unusual change.

An independent Netflix “has disappeared”, predicted a financier. It’s a very valuable platform, but “more of a growth story.” Hastings and Sarandos ‘didn’t manage Street’s expectations’ and lost a few hundred million dollars’ in market capitalization in one fell swoop, he said, referring to his last post-earnings video call when the co-chiefs discussed the lack of subscribers.

Over the next 18 months, “the environment will be clearer,” he said.

It’s also around this time that buyers might consider rushing to pick up WBD. The structure of this deal would result in a heavy tax penalty for any purchaser within two years of closing.

What happens by then is anyone’s guess. The Netflix effect has spread to stocks of other streamers as investors question the economics of the high-cost, low-profit activity. Meanwhile, pent-up demand, the Russian-Ukrainian war and ongoing Covid-related supply chain issues have sparked sky-high inflation. Corresponding interest rate hikes by the Federal Reserve risk provoking a recession, a fear that has hit advertising and could spill over to other areas of entertainment.

As a result, the Allen & Co. crowd is gathering just after the S&P 500 closed its worst first half since 1970, down more than 20%. The Nasdaq was worse, down almost 30%, and the Dow fell 15%. Tech stocks were the hardest hit, but media underperformed broader markets at the end of the second quarter yesterday.

Offers are always up to date. The long gestation CAA-ICM merger has just been completed (Allen & Co. advised CAA). Elon Musk’s Twitter deal (Allen is an adviser to Twitter) and Microsoft’s purchase of Activison Blizzard (with Allen advising Activision) are pending.

But a PwC M&A prospect recently predicted a slowdown in the biggest big-media M&A — which just seemed to pick up speed last year — amid low stock prices and high interest rates. . Paying with stocks is now limited and accessing the debt market is more expensive. Companies don’t like to sell at a low point.

Endeavor just cut $400 million yesterday to $800 million from a pending $1.2 billion cash and stock buy for sports betting platform OpenBet.

And he’s not always right, but he’s not the only one: Zuckerberg reportedly told Meta Today staffers that: “If I had to bet, I’d say this could be one of the worst downturns that we have seen in recent history.”

Comments are closed.