Sun Valley Moguls Shift From Acquisitions to Sales to Refine Media Models
Media executives gather at Allen & Co.’s Sun Valley conference this week looking to shed assets such as the Hulu LLC video website and G4 game channel amid a declining global stock market and slowing economic growth.
Rupert Murdoch and executives from Hulu’s owners will join Warren Buffett, Bill Gates, and Mark Zuckerberg among about 300 participants scheduled to arrive today for the weeklong annual conference in Idaho organized by the investment bank.
“I talk to some bankers inside of big media players and they are seeking to refine their models and shed some things that they once thought they needed to own,” said Anthony LeCour, a New York-based media investment banker formerly at LaidLaw & Co. who is now a consultant. “We’ll see a lot of deal-making and it’s not going to be all monster deals. There will be a lot of small, sweet spots.”
Takeovers of technology and media companies globally climbed 38 percent in the first half to $51.1 billion from the $37 billion announced a year earlier, according to data compiled by Bloomberg. There’s also a boom in Internet companies going public, including LinkedIn Corp. and Zynga Inc., the largest maker of games on Facebook Inc., with help from Allen & Co.
Overall, concerns about stock markets and slowing economic growth are taking a toll on deal-making, with takeovers in June tumbling to the lowest level in eight months. Still, media stocks have been holding up. The Standard & Poor’s 500 Media Index has gained 15 percent in the first half, compared with 5 percent for the S&P, which is down 1.8 percent from its April 29 peak this year.
Murdoch, the 80-year-old chairman and chief executive of New York-based News Corp. (NWSA), is expected at the conference a week after agreeing to sell the MySpace social-networking website to Specific Media Inc. for $35 million, a fraction of the $580 million News Corp. paid six years ago. MySpace had lost its early lead in the industry to Zuckerberg’s Facebook.
Among the assets attracting potential suitors are Hulu, the video-streaming service owned by News Corp., Walt Disney Co. (DIS) and Comcast Corp. (CMCSA)’s NBC Universal, and G4, a Comcast unit. Top executives from all three media companies are attending the Sun Valley retreat, according to a copy of the private guest list obtained by Bloomberg News.
Hulu has reached out to 10 to 12 potential bidders through its bankers, a person familiar with the process said this month. Google Inc. (GOOG), Yahoo Inc. and Microsoft Corp. (MSFT) have met with Hulu bankers Morgan Stanley and Guggenheim Partners, said the person, who wasn’t authorized to speak publicly.
Hulu, which scuttled an IPO that had been projected to value the company at $2 billion, is an asset likely to appeal to a large company like Mountain View, California-based Google, according to Shahid Khan, chairman of MediaMorph Inc., a New York-based media advisory and venture firm.
“There’s a big move towards premium programming, which is what Hulu has,” Khan said. “Google is the best candidate to buy Hulu. They can monetize it a lot better, they have a strong ad team and much better ad technologies. Plus, they have a lot of cash.”
NBC Universal has been in talks to sell G4 to Ultimate Fighting Championship, the mixed-martial-arts league, people with knowledge of the situation said last month. The channel may fetch as much as $600 million in a sale, according to analysts including David Joyce of Miller Tabak & Co. D’Arcy Foster Rudnay, a Comcast spokeswoman, declined to comment.
Comcast, which in January acquired control of NBC Universal from General Electric Co. (GE), might consider selling other cable networks in addition to G4, according to Khan.
“They have a lot of genre overlap as a result of the acquisition,” Khan said. “They are going to have to do a lot of rationalization of the networks.”
Among the Sun Valley participants seeking to buy assets is IAC/InterActiveCorp.’s chairman, Barry Diller, who in December stepped down as CEO of the New York-based owner of websites. Diller said IAC needed a new chief executive to seek acquisitions. His successor, Greg Blatt, is also attending the Sun Valley conference. Both declined to comment.
Other media assets may come to the market.
AMC Networks Inc., spun off from Cablevision Systems Corp., could become a takeover target for other media companies or private equity firms, said Tom Eagan, an analyst at Collins Stewart LLC in New York.
“A larger media company with a bigger ad sales force could probably take advantage of AMC,” Eagan, who predicted a takeover could occur in 2012 at the earliest, said last week.
TiVo Inc. (TIVO), the Alviso, California-based pioneer of digital- video recorders, may be of interest for a company such as Google or Microsoft, according to Janney Montgomery Scott LLC. In the cable industry, Insight Communications Inc. has hired Bank of America Merrill Lynch and UBS AG to explore strategic options including a possible sale.
Cable billionaire John Malone, a Sun Valley regular who is expected to attend again this year, is trying to buy the bookstore chain Barnes & Noble Inc. Malone’s Liberty Media Corp. offered $1 billion in cash for the company in May.
Since 1983, the Sun Valley Conference has been sponsored by the media investment-banking boutique Allen & Co. It is called a “summer camp for moguls,” as the heads of industry ride around the resort on bicycles, go fishing, hiking and white-water rafting. Many of them bring their families, and the guest list usually includes a few celebrities, from politics, sports or entertainment. New Jersey Governor Chris Christie and the actress Candice Bergen are on this year’s list.
It’s the kind of place where a passing interest can blossom into a deal, according to LeCour, the investment banker.
“You get all these powerful people to go on a retreat in the mountains together,” he said. “It’s perfect for trading and transactions.”
To contact the editor responsible for this story: Peter Elstrom in New York at firstname.lastname@example.org.