First, July 4. Then, Sun Valley. Right after Independence Day, media and technology titans will once again jet to the Idaho resort to mingle at the annual gathering of investment bank Allen & Co., which has been nicknamed “summer camp for moguls.”
The secretive and exclusive gathering of media, tech and other power brokers traditionally mixes presentations, discussions and such social activities as hiking, rafting and golf. And deals talk, whether first contact about a potential merger, discussions of pending or completed transactions or meetings that lead to M&A conversations down the line. has long been a hallmark of the invite-only Allen event.
This year is unlikely to be different, even if the tone may be different from last year. For example, as CEO of Discovery, David Zaslav has long been one of the media moguls attending the annual gathering and one who has been sought after by his peers and media reporters alike. This week, he returns as full-blown Hollywood titan of an expanded empire as CEO of Warner Bros. Discovery. Expected to join him is his long-time right-hand man and deals advisor Bruce Campbell, the merged entertainment powerhouse’s chief revenue and strategy officer.
Last year, Zaslav came to town after having unveiled the mega-deal with telecom giant AT&T for its entertainment arm WarnerMedia. This year, his visit follows the deal close and first moves to put his stamp on Warner Bros. Discovery’s corporate structure, including the departure of various high-level executives.
Other deal talk could this year move from hunting for new targets to focus on getting the most out of past deals or existing business portfolios. After all, PwC in a recent report noted that “deals activity has recently slowed among some of the major media companies, following a peak driven by content and technology acquisitions to fuel expansion of streaming services.”
Paramount Global non-executive chair Shari Redstone, who is also traveling to Sun Valley, recently addressed the scale of the company created by the merger of CBS and Viacom, saying it has “what it takes to succeed” as it topped 62 million global streaming subscribers as of March.
Given weakened media and entertainment stock prices amid a difficult first half of 2022 and fears of a recession, which would hit advertising revenue of companies, many executives could over the near-term focus more on the blocking and tackling needed to navigate the new uncertainty than on striking big, transformative deals.
One pending big deal that is still likely to draw much attention in Sun Valley this year is Tesla and SpaceX chief Elon Musk’s $44 billion planned takeover of a social media giant Twitter. The fact that both Musk and Twitter CEO Parag Agrawal are expected in town adds more intrigue. Not that such added intrigue was necessary given that Musk had tweeted in May that the Twitter deal was “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” The social media powerhouse had reported 229 million users who were serving advertising in the first quarter, which would mean 5 percent of those users would amount to 11.45 million.
It may not be the only case of awkward encounters in Sun Valley. After all, Walt Disney CEO Bob Chapek, fresh off a contract extension, is on the guest list, as is his predecessor Bob Iger. The latter stayed at the company as executive chairman until the end of last year. After that, Chapek put his stamp on the Mouse House by filling key roles that had been held by close Iger advisers and outlining new “strategic pillars” for the conglomerate.
But the CEO’s tenure has also come with some tumult, including its lacking corporate response to Florida’s so-called “Don’t Say Gay” bill that left employees outraged, Florida’s move to strip Disney of its special tax district in the state and the recent debate about the firing of Peter Rice, its top TV executive. With that in mind, any photos or reports of Chapek and Iger chatting, or simply standing near each other, could draw attention.
The same is true for two invited Meta Platforms executives: CEO Mark Zuckerberg and COO Sheryl Sandberg, who recently announced that she would step down this fall after 14 years at the company formerly known as Facebook.
Wall Street observers expect industry bosses to also discuss in Sun Valley — whether in formal sessions or during social gatherings indoors or outdoors — such challenges as rising inflation, which could impact the upside for sector giants’ pivot to streaming services. After all, amid increased competition, the rising cost of living and Netflix’s shock first-quarter subscriber drop, analysts have debated whether the one or the other Hollywood powerhouse’s streaming subscriber and financial forecasts may have to come down. Management teams have also focused more commentary on a disciplined approach to content budgets.
“With the proliferation of several new direct-to-consumer services, the competitive landscape in streaming has been intensified,” Bank of America analyst Jessica Reif Ehrlich wrote in a mid-June report. “This is driving significant increases in content spending (including local content) globally along with an uptick in churn for leading services such as Netflix (and majority of net add growth skewing towards newer entrants).