Uncertainty on the horizon for Sun Valley

Stocks are up, but that might not translate to big deals

As Rupert Murdoch, Bob Iger and other media honchos assemble in Sun Valley next week for some fly-fishing or white water rafting, spirits should be brighter than a year ago: Stock prices are up by about a third, after all.

That alone provides the currency and freedom to get down to the real business of the media summit, one that boutique investment bank Allen & Co. annually hosts in the shadow of the Pioneer Mountains in Idaho. For the past 27 years, the Sun Valley Lodge has been the spot where blockbuster media deals have been hatched.

Even in 2009, when advertising revenue nosedived, Comcast's co-founder Ralph Roberts had the moxie to talk to General Electric CEO Jeff Immelt about a deal for NBC Universal.

This year, it could be Disney CEO Iger who finds himself center stage amid speculation he may shop ABC -- something Disney has denied. Or veteran dealer Barry Diller from IAC/InterActiveCorp, who has said he would look at a deal involving his Ask.com search engine.

New-media hotshots such as Facebook, LinkedIn, and Zynga -- on nearly everyone's wish list -- are also expected to attend. As are Google, Time Warner, News Corp., all flush with cash.

"You would think this is going to be a pretty exciting Allen event," said Mike Vorhaus, managing director of consulting firm Frank N. Magid Associates. "Fundamentally, the people at that place, every single one of them, is worth 30% or 40% more than they were a year ago."

Still, once they step off their private jets and settle in fireside, media chiefs may not be much in the mood for dealmaking, given jittery financial markets and fears the U.S. is heading into a double-dip recession.

Jonathan Knee, a media banker at Evercore Partners, said most executives remain "gun-shy" and any dealmaking would likely involve cable channels or modest new media plays, rather than the blockbuster takeovers.

"The brief euphoria of the beginning of the year has been tempered dramatically both by the recent volatility in the economy and even the quarterly results," said Knee.

"People are glad it's not the bloodbath they thought it might be last year, but I don't think that any believes they have permanently dodged a bullet."

Among the concerns that could unnerve CEOs is consumer confidence, fragile European economies and, closer to home, a shift in media power from companies that produce entertainment, such as CBS, to those that deliver it, such as Time Warner Cable or Apple.

As head of Apple, Steve Jobs has become perhaps the most commanding and recognizable figure in media today. Jobs is on the guest list for the Sun Valley conference, but it's not clear if he will show up.

Present or not, Jobs will no doubt feature prominently in discussions about new media business models in the digital age, especially in the wake of the successful iPad launch. Apple has already sold more than 3 million of the multimedia tablets, even though it has struck relatively few content deals with the entertainment companies.

Paul Levinson, an author and professor of media studies at Fordham University, is among those who say that traditional content is no longer king, having given way to hot devices and popular digital media.

"Ultimately, what moves the industry forward is the new media and devices and the public's love of them," he said. "Remember, live theater was once the main entertainment."

Others point out that critics have talked about traditional media companies turning into dinosaurs for years. But they have repeatedly shown their staying power -- as evidenced by the attention they draw each summer at Sun Valley.

That is not to say that old school media chiefs won't be harboring new media dreams during cocktail hour at the lodge.

"They are all still looking, and they are all still hoping, and you will still see dabbling," said Evercore's Knee. "But if it is a halfway decent business they are unlikely to be the high bidder and if it's a really large business they risk extraordinary shareholder wrath."