SUN VALLEY, Idaho (Reuters) - Media and technology moguls gather in Idaho this week to once more debate a shift to a digital world, but the talk this year will finally focus on how to make money off it.
Unlike in years past, this year’s attendees at the Allen & Co conference in Sun Valley will discuss how to go beyond experimenting with digital services such as mobile TV, and begin thrashing out ways to overhaul long-standing business models designed for a print and video-tape era.
The annual pow-wow attended by the giants of old and new media — from News Corp’s Rupert Murdoch and Walt Disney Co’s Bob Iger to Facebook’s Mark Zuckerberg — is traditionally the venue for hatching blockbuster deals.
In the past year, industry executives have increasingly talked about taking action, not protecting preexisting revenue streams — even if that means selling digital assets like video site Hulu or failed social networking site MySpace to revamp their strategy.
The establishment is still far from certain how their diverse digital businesses will shape up, said James Schwab, a partner at Paul, Weiss, Rifkind, Wharton and Garrison.
But with newcomers such as Google Inc — a potential buyer of Hulu to supplement its Youtube service — and Apple Inc jumping feet-first into Web-based media and Facebook and Groupon luring away advertisers, it may be approaching crunch-time for media conglomerates.
“What they do know is that they need to engage with digital opportunities on each of these fronts,” said Schwab, who has brokered numerous media deals, including the merger that created Time Warner Inc.
Hollywood studios planned this year to roll out a system called Ultraviolet, which lets consumers stream a movie bought online to mobile devices. And TV Everywhere, a proposal led by Time Warner CEO Jeff Bewkes and Comcast Corp CEO Brian Roberts, aims to allow cable customers to access their shows online away from home.
Executives meeting in the shadow of Idaho’s Pointer Mountains from Wednesday will talk also about the stuttering U.S. economy — as they have for the past three years. A newer topic of concern will be cyber-security following a series of severe hacking incidents at Sony Corp.
But it’s the long-term future of media that will top the agenda. Media executives, particularly content owners, have long been keen to avoid jeopardizing lucrative global licensing arrangements, only to see them replaced with less valuable digital ones. This has been one Hulu’s challenges.
The popular TV video website raises both a conflict and opportunity for its owners. News Corp and Disney in particular may have felt the site would do better for all concerned as a stand-alone business. Hulu is also owned by Comcast’s NBC Universal and Providence Equity Partners.
Several of Hulu’s potential buyers are expected to attend the Allen & Co’s organized event including Google, Yahoo and Microsoft Corp.
The owners have renewed long-term content licenses to make Hulu a more enticing prospect. Some observers note that Hulu still underscores how content rights-holders retain an edge over up-and-coming media players like Google, which excels at engaging an Internet audience but needs quality programing.
“Google has been trying for years to acquire eyeballs and challenge the traditional media business. But the rights-holders still hold all the cards,” said Chris Marangi, a portfolio manager at Gabelli Multimedia Funds.
Hulu’s potential new owners — so far all divorced from the established content business — will no doubt be watching Netflix Inc for signs the market is ripe for a new distribution model — distinct from cable or satellite.
Netflix has over 20 million U.S. subscribers and is on course to overtake Comcast as the No.1 pay-video subscription service — albeit on lower per-user revenue.
Ted Sarandos, the Netflix executive charged with inking expensive deals with content producers, is expected to be in Sun Valley and it’s likely he’ll be busy. He will also offer new opportunities for content owners: on Tuesday, they announced an expansion into Latin America.
Editing by Edwin Chan and Lisa Shumaker