Media and technology moguls are jetting to Sun Valley, Idaho this week for mountainside pressing of the flesh and potentially some deal-making.
The exclusive confab, sponsored by investment bank Allen & Co., gets started Tuesday behind closed doors, allowing the captains of industry to trade in their power suits for casual wear and engage in their passion for mergers and acquisitions.
“There always this mystique around Allen & Co.,” said Tony Wible, an analyst with Janney Capital Markets. “It’s notorious for pulling a lot of big moguls together in a room and shaking up their industries right after.”
Among those expected to attend are old guard soldiers such as 21st Century Fox Chairman Rupert Murdoch, Time Warner Chairman Jeff Bewkes, Disney Chairman Robert Iger, CBS Corp. chief Leslie Moonves, Viacom CEO Philippe Dauman and DreamWorks Animation CEO Jeffrey Katzenberg.
Representing a rising generation of Silicon Valley titans are Facebook co-founder Mark Zuckerberg and Yahoo CEO Marissa Mayer, as well as such eminences grise of the tech scene as Apple CEO Tim Cook and Google co-founder Larry Page.
Past years have played a key role in fostering the sale of NBCUniversal to Comcast, Jeff Bezos’ “why not?” novelty purchase of the Washington Post and the wedding of Time Warner and AOL, an unhappy union that ultimately ended in divorce.
This year, Sun Valley unfolds at a time of consolidation in the cable space, and strategic pruning among legacy giants. Time Warner, for instance, arrives looking a little thinner, having unloaded its magazine properties, while Murdoch has a year under his belt after halving his media empire and spinning off his publishing assets into a separate company.
The octogenarian may be in the thick of some deals. Murdoch will hit the walking trails amid reports he has ambitions to buy Time Warner. Spokespeople for both companies declined comment.
Fox and Time Warner aren’t the only companies that have tongues wagging. Analysts and investors will be watching for signs that Discovery might buy Scripps, Disney will nab Discovery or Google will make an impulse buy. Netflix, which has largely avoided the mergers and acquisitions route while building its streaming empire, could also be a player, Wible said. Of course, most of these deals will never make it to the flirtation phase, let alone get consummated.
“It’s more likely that the smaller guys may look to merge,” said Wible. “There will be more pressure on them to do something.”
As media barons look anxiously at their share prices, they may have a greater appetite to make a deal.
“A case can be made that much of the gains in the overall stock market have been fueled more by share repurchases than by a really wonderful performance on the part of these companies,” said Hal Vogel, CEO of Vogel Capital Management. “The gains of the last two or three years might free up cash to do a deal.”
Mergers are the sexiest element of Allen & Co., but there are some larger trends that these Masters of the Universe are currently grappling with. Among them is a mounting sense that there are fewer jobs in a digital economy. Though unemployment levels in the U.S. dipped last month to their lowest point since the 2008, the recovery has been agonizingly slow. A lack of expendable income imperils both media and technology makers.
“Technology has always eliminated jobs since the days of John Henry and the steam driver, but on balance it has created more jobs than it has eliminated,” said Paul Saffo, a technology forecaster at Discern Analytics.”There’s a real case that since the do.com revolution it has eliminated more jobs than it created and that the financial recovery is a jobless one. Is this a secular change and if so what are we going to do about it?”
Another trend to watch for will be the consolidation in the cable space. Already, Comcast is fighting to earn regulatory approval for its $45.2 billion deal to buy Time Warner, while AT&T is trying to win support for its own $49 billion pitch to buy DirecTV. If both pacts happen, it will mean fewer, bigger players at a time when digital upstarts are nipping at cable’s heels.
Part of that revolution is being fueled by telecommunications giants such as Verizon, who as the Wall Street Journal notes, are potentially interested in content companies. And they have the cash to make those ambitions a reality.
“The flavor du jour this year is telecom,” said Vogel.