Billionaires Head to Sun Valley to Discover the Next Megadeal

Updated on
  • Cable companies under pressure for exclusive content: Zaslav
  • Murdochs, Buffett, Bezos, Zuckerberg among event’s invitees

Media Moguls Weigh Washington, M&A in Sun Valley

At least one media mogul is expecting to see a lot more deals like AT&T Inc.’s $85.4 billion purchase of Time Warner Inc., and the seeds for such megamergers could be planted this week in a resort town in Idaho.

Pay-TV providers and phone companies like AT&T are realizing they need exclusive programming to set themselves apart in a crowded media landscape, said Discovery Communications Inc. Chief Executive Officer David Zaslav, one of the first bigwigs to arrive at the annual conference in Sun Valley, hosted by Allen & Co. He cited the Time Warner deal and Verizon Communications Inc.’s purchase of Yahoo! Inc.’s internet business as examples, along with Discovery’s own deals to provide sports programming to European TV providers.

“There’s more pressure on cable players around the world, satellite and mobile players, to merge or figure out how to offer all those together,” Zaslav told reporters. “Two to three years from now you’ll buy that all from one person. We have great, exclusive content to provide, so they’re going to need us.”

Snap Inc. Chairman Michael Lynton and investor Stanley Druckenmiller were among the early arrivals on Tuesday at the conference, which unites executives in the media, telecommunications and technology industries.

Viacom. Inc. Vice Chairman Shari Redstone, News Corp. CEO Robert Thomson, IAC/InterActiveCorp CEO Joey Levin, Home Depot Inc. co-founder Ken Langone, New England Patriots owner Robert Kraft, Publicis Groupe SA Chairman Maurice Levy and Expedia Inc. CEO Dara Khosrowshahi were also seen showing up at the confab, which typically kicks off on the first Tuesday after the July 4th holiday. The weeklong retreat includes presentations and social activities for executives and investors, who are frequently accompanied by family.

The gathering hosted by the investment banking boutique -- a mergers and acquisitions adviser to companies like Facebook Inc. and Sirius XM Holdings Inc. -- is happening for the first time during the Trump administration, whose pro-business policies have generated optimism that deal activity will pick up. On the other hand, Trump has expressed concern about combinations such as AT&T’s acquisition of Time Warner, saying he doesn’t want to see too much concentration of power in the media industry -- threatening to throw a wrench in the type of megadeals this particular conference is known to spawn.

“Overall the focus is more likely to be lighter in the focus of how you handle antitrust, so overall less regulation is more positive,” Zaslav said. “So from that perspective, there’s likely to be a favorable environment for business here.”

Amid the barbecues and cycling outings, investors on the guest list, including Warren Buffett, will have the opportunity to mingle with CEOs from America’s biggest companies, like Apple Inc.’s Tim Cook, and dignitaries such as Yousef Al Otaiba, United Arab Emirates ambassador to the U.S. The event is private and mostly held out of the public view. Much of the resort is off limits during the week and security is high.

The invite-only, laid-back conference is known for setting the groundwork for industry-shifting deals. A classic example is the 2013 sale of the Washington Post to Inc. founder Jeff Bezos. The Post had retained Allen & Co. to find buyers, but it wasn’t until the the Idaho conference that a deal was struck. It isn’t just corporate dealmaking. Politicians have also used the event to make connections and find donors. Mark Zuckerberg donated $100 million to the public school system of Newark, New Jersey, after meeting its then-mayor, Cory Booker, at the leafy resort in 2010.

Verizon CEO Lowell McAdam is among the most closely watched executives invited to the conference. Though his deal to acquire Yahoo has boosted Verizon’s online traffic, he doesn’t have the bounty of video programming that rival AT&T is acquiring with Time Warner, owner of HBO and the Warner Bros. film studio. Verizon is open to talks with Comcast Corp., Walt Disney Co. or CBS Corp., McAdam said in an April interview. He’ll have his chance in Sun Valley, with executives from all three companies in attendance.

In a brief exchange with reporters Tuesday, McAdam seemed to signal a Disney deal isn’t afoot at least, appearing to shake his head no when asked whether Verizon was merging with the entertainment giant. CBS Corp. CEO Les Moonves also downplayed deal speculation, saying the broadcaster isn’t combining with Lions Gate Entertainment Corp. and doesn’t need a merger with Viacom Inc.

Bezos, whose deals have a tendency to upend markets, will get attention wherever he roams. Amazon made a splash last month with the deal to acquire Whole Foods Market Inc., and the tech giant has explored takeover talks with business-chat startup Slack Technologies Inc., as Bloomberg News reported earlier. Slack CEO Stewart Butterfield is also expected at Sun Valley.

Amazon is one of several tech titans trying to make a splash in original TV programming. Facebook, Apple and Google’s YouTube, the digital advertising behemoths, are also preparing their own video shows to siphon more ad spending from traditional TV.

Like Amazon and Google parent Alphabet Inc., Apple is also pouring money into artificial intelligence, a space ripe for deals. This year’s conference is expected to feature several marquee names in autonomous car tech, including Chris Urmson, the former director of Alphabet’s self-driving unit -- now at his own startup -- as well as Elon Musk, founder of Tesla Inc., who last week revealed its first Model 3 had rolled off the production line. Also on the list: executives from the major automakers, which have laid down hundreds of millions in investment and deals to compete with driverless vehicles.

“I expect to have a lot of conversations about what AI means to the media experience,” David Kenny, senior vice president of IBM Corp.’s Watson technology, told reporters late on Tuesday afternoon.

Sam Altman, head of the influential startup incubator Y Combinator, called the spread of AI applications the “most important trend in technology right now.”

Other movers and shakers at the conference are still trying to close their big deals. Jeff Bewkes of Time Warner and Randall Stephenson of AT&T are both invited to the event. AT&T’s deal for Time Warner is set to close this year, if the companies can win government approval over Trump’s objections.

Rupert Murdoch, with sons James and Lachlan, are expected to be making the rounds. They’re awaiting the U.K. government’s signoff on their plan to acquire full control of satellite-TV company Sky Plc. The trio was at Sun Valley last year when news broke of Gretchen Carlson’s sexual discrimination lawsuit against Fox News Chairman Roger Ailes, leading to his ouster and increased scrutiny of the Sky deal.

(Updates with IBM, Y Combinator comments starting in third-to-last paragraph.)
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