* Execs likely to focus on how to make money from digital
* Hulu sale, Netflix challenge likely to be high on agenda
By Yinka Adegoke
SUN VALLEY, Idaho, July 5 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 (NWSA.O) Rupert Murdoch and Walt
Disney Co's (DIS.N) 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. [ID:nN1E760169]
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 (GOOG.O) -- a
potential buyer of Hulu to supplement its Youtube service --
and Apple Inc (AAPL.O) 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 (TWX.N).
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 (CMCSA.O) CEO
Brian Roberts, aims to allow cable customers to access their
shows online away from home. [ID:nN12277808]
DIGITAL'S LONG SHADOW
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 (6758.T).
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
(YHOO.O) and Microsoft Corp (MSFT.O).
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 programming.
"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 (NFLX.O) 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. [ID:nN1E7640AP]
(Editing by Edwin Chan and Lisa Shumaker)