Will harsh economic times dampen deal-making enthusiasm at the annual Allen & Co. conference? Don’t count on it, experts tell
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 has been 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 . “And they get to do this because their infrastructure isn’t there with them acting as gatekeepers.”
Despite its high profile, the event still operates in an a “cone of secrecy.”Sun Valley Resort will host panels and power lunches, while also serving as the central hub of outdoor activities for media moguls who mix business with pleasure. Security is tight. Due to sensitive nature of executive talks media access is restricted.
Discussions about major deals
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. Due to the financial crisis, industry skeptics wonder if there are any active deals being made at Sun Valley this year. Despite volatile times, there is always opportunity around the corner.
“The curtailment of some production activity indicates a bit of exhaustion with chasing other streaming players,”Dale Wettlaufer, Charlotte Lane Capital CEO, said. “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 goal of the guest list at heart: a platform for company leaders to improve their positions and seek out strategic ways that they can grow and protect their customer bases. Ironically, more talks may be encouraged by the financial downturn.
“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.”
Keep an eye out for deals discussions
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 rumors that Netflix is interested in buying Roku. Whether this is true or not, Roku will be attracting attention from a wide range of suitors at the conference. 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 is the owner of NBCUniversal holds billions of dollars in cash as it considers whether it wants to buy or sell in the media industry. It missed out on major deals with Fox and WarnerMedia. In these streaming wars, it may be time to pull the trigger or get out of the way.
Apple always has plenty of cash in its bank account. Apple TV+ could be fed with content by a marquee acquisition that would also bring in value for shareholders and eliminate 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. The industry is interested in a possible Idaho reunion due to tensions between Chapek and Iger, who recently received a three-year Disney deal. 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,”According to one media insider,
Sun Valley-bound executives will need to keep the same mission-focused discipline that won them the office. “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.”
