Media moguls meet at Sun Valley amid industry changes

By Sue Zeidler

SUN VALLEY, Idaho (Reuters) - The summer U.S. box office is sizzling due to hits like "Hancock" but Hollywood leaders focused on the chilling effects of industry change brought on by labor strife, fragmentation and new technology at the annual retreat of moguls this week.

"The whole industry is in transition," said Anne Sweeney, co-chairman of Walt Disney Co's Disney Media Networks and President of Disney-ABC Television, as she left the morning session of the annual Allen & Co media confab in Sun Valley.

"I'd say that every day for the next five years, you have to track consumers and be adaptable," she said.

While the U.S. box office is on pace to top last year's record summer revenues of over $4 billion, industry watchers note the overall pie is being divided differently than a year ago as big studios such as Viacom Inc's Paramount have sought to cut risks but also profits by serving only as distributors of big films like "Iron Man" and "Kung Fu Panda."

Big studios are also facing oversupply as new, small players like Overture Films, Summit Entertainment, Weinstein Co and a repositioned Metro-Goldwyn-Mayer Inc have added films to the pipeline at a time of stagnating attendance and slowing DVD sales and an increasingly fragmented audience to the Web.

One speaker during the morning session of the conference predicted that DVDs were going the way of CDs, which have seen sales collapse with a wide-scale generational shift to digital downloading that the music industry has struggled to monetize.

"I think it's a fundamental issue. The question is how rapidly will (DVD revenue) get replaced. Are we replacing analog dollars with digital pennies?" said a media executive at Sun Valley, who declined to be identified.

Still, many industry leaders remained upbeat that much of Hollywood's woes are cyclical in nature.

"I'm an optimist. People are going to movies. If I criticize the studios for making too many films, I'd be criticizing myself," said Ron Meyer, president and chief operating officer of General Electric Co's Universal Studios.

Meyer said he aimed to keep the studio's film release at a total of 16 to 18 films a year, which he said was in the middle of industry levels.

LINGERING THREAT

Hollywood is still reeling from the effects of last winter's 100-day walkout by the Writers Guild of America and the lingering threat of another strike by the Screen Actors Guild (SAG).

The writers strike largely idled TV production and thousands of workers and cost the LA-area economy an estimated $3 billion.

However, the Tuesday ratification of a new prime-time TV contract by the smaller of Hollywood's actors unions appeared to undermine a last-ditch bid by SAG to secure a richer deal.

In any event, the threat of a strike has forced some studios for months to refuse to greenlight projects to avoid possible costly labor disruptions.