Media and tech giants head to Sun Valley with streaming alliances in mind

The Sun Valley guest list reportedly includes traditional media leaders like Warner Bros. Discovery’s David Zaslav; Disney’s Bob Iger and his potential successors Dana Walden, Alan Bergman, Josh D’Amaro and Hugh Johnston; Netflix co-CEOs Ted Sarandos and Greg Peters; tech titans like Amazon’s Andy Jassy and Jeff Bezos; and Apple CEO Tim Cook. While these heavyweights are regular attendees at the conference, it’s unclear whether they’ll be in attendance this year.

Also on the guest list is conference regular Shari Redstone, whose appearance at the conference comes after National Amusements, the majority shareholder of Paramount Global, agreed to merge the media company with Skydance after months of negotiations.

There will likely be plenty of discussion about the transaction process. But more importantly, Sun Valley could also be a key setting for moving deal talks forward. The Skydance deal includes a 45-day “go-shop” clause, meaning potential bidders still have time to make their offers.

On a larger scale, the Paramount deal will serve as a backdrop to the broader discussion about the streaming business and how to make it profitable. In recent years, media companies have sought to attract large subscriber numbers in an attempt to outdo each other. But this time, the focus will be on how to come together to make the tricky streaming business work.

“The real issue here is how these companies are going to make streaming TV accessible to everyone,” said Neil Begley, an analyst at Moody’s Investors Services. “It’s going to be either more aggressive use of bundled services, joint ventures or mergers.”

With Netflix leading the so-called streaming wars, with 269.6 million members worldwide, many other streaming players believe there is room for combinations to keep up.

Media mogul Barry Diller, who also tried to acquire Paramount, said the industry should stop chasing Netflix and focus on streaming and pay-TV businesses that remain profitable.

Executives at Paramount, which will soon own the network, said Monday in a conference call with investors that the company plans to explore partnerships or bundles with other streaming players. Former NBCUniversal CEO Jeff Shell, who is expected to become Paramount’s next chairman, said Monday that he sees bundles and joint ventures as the future of the streaming business.

Current Paramount management has also been in active discussions with other media and technology companies about merging Paramount+ with another streaming platform, CNBC previously reported.

“I personally think that eventually the streaming world will look a lot like the (pay TV) world looked in the past,” Shell said on Monday’s call, adding that the investor consortium buying Paramount has received interested calls about potential streaming partnerships.

Shell believes there will one day be a “one-stop shop” for all the streaming apps that are aimed at consumers. “If you’re in that group, you’re going to win. And if you’re not in that group, you’re in real trouble,” he said.

Mergers or joint ventures are one possible solution. Consolidation of services is another solution, and some media companies have already taken steps in this direction.

While Disney is bundling its own streaming services (Disney+, Hulu, and ESPN+), it is also partnering with other companies.

Disney and Warner Bros. Discovery plan to offer a bundle that will be a mix of Max, Disney+ and Hulu, which will launch this summer. The two companies are also joining Fox Corp. in offering a sports streaming service that is expected to launch in the fall.

“There will be real alliances, and they need to be, because media is in a desperate enough situation today that none of the traditional companies can do it alone,” said Jonathan Miller, managing director of Integrated Media, which specializes in digital media investing. “They’ve all realized it and they’ve taken enough hits already.”

The general idea is to incentivize users to come watch their shows and movies, even at a discounted price. Begley says Sun Valley should consider raising streaming prices on premium tiers and incentivizing consumers to turn to ad-supported options to maximize ad revenue.

“I think Sun Valley is going to focus more on the question, ‘What do we do?’ It’s all these diverse media companies that used to control Hollywood and are no longer the kings they used to be,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners.

With NBA media rights negotiations still ongoing, sports will remain a topic of conversation at this year’s gathering.

League commissioners, particularly the NFL’s Roger Goodell, are a frequent presence at the Sun Valley conference. Over the past year, streaming and tech players have taken over an even larger share of the space traditionally held by traditional companies.

The NFL has signed 11-year media rights deals valued at more than $100 billion, and the league has shown that it sees streaming as a critical part of its future. Amazon is the exclusive owner of “Thursday Night Football,” while Google’s YouTube TV recently acquired the rights to “Sunday Ticket.” Netflix recently announced that it would begin streaming NFL games on Christmas Day.

Current NBA rights holder Warner Bros. Discovery is considering matching a rival bid for media rights as the league looks to finalize smaller deals. The league is close to signing deals with Disney, NBCUniversal and Amazon, CNBC previously reported.

“Another big theme (at Sun Valley) is the depth of our presence in the sport,” Miller said. “It’s pretty clear that the NBA is the last contract of its kind for traditional players. In eight to 10 years, they’re not going to be able to compete.”

Sports remain the glue of traditional pay TV and have also proven valuable for streaming services. Live TV, especially sports and, to some extent, news programming, have attracted the largest number of viewers.

“With sports rights off the table for a while, the next time those rights become available, it’s likely that Amazon and Netflix will play a much larger role,” Begley said. “The linear TV business is in decline and it’s a long way from making money from streaming; we’re likely to see the end of traditional media’s dominance in sports rights.”

Sun Valley also counts among its regular participants American politicians, economists and university leaders.

With that in mind, the upcoming election is likely to “dominate a lot of the discussion” in Sun Valley this week, Miller said.

Some business leaders are waiting for the outcome of the next election before making major deals, saying the current regulatory environment and high interest rates have cooled negotiations.

And more imminently, the political conversation will likely focus on whether President Joe Biden will remain, or should remain, the Democratic Party’s nominee after his disastrous performance in last month’s debate.

In recent days, major party donors have called for Biden to resign.

Dissenting voices and donors increasingly include media heavyweights like Diller, Endeavor Group Holdings’ Ari Emanuel, Netflix co-founder Reed Hastings and screenwriter Damon Lindelof. All believe Biden should step aside to allow a new candidate to take his place. Former Disney Studios chairman Jeffrey Katzenberg wouldn’t say whether his longtime support for Biden has changed.

Meanwhile, Disney heiress Abigail Disney said she would withhold funding from the Democratic Party until Biden steps down.

The president defended his mental health in a recent interview and has repeatedly said he has no plans to withdraw from the election.

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

Correction: This article has been updated to correct that former Disney Studios chairman Jeffrey Katzenberg was apparently silent on whether his longtime support for President Joe Biden has changed. An earlier version misstated Katzenberg’s position.