Streaming alliances are at the top of the agenda

A view of the Sun Valley Lodge in Sun Valley, Idaho.

Drew Angerer | Getty Images

Media and technology giants are gathering in Sun Valley this week to lay the groundwork for the future of streaming — and potential alliances.

Allen & Co.'s annual conference, often referred to as “summer camp for billionaires,” kicks off Tuesday at a ski lodge in Idaho. The conference, held since 1983, is the birthplace of media megadeals and the place where industry leaders discuss the future of their companies and the broader economy.

The Sun Valley Invite List Reportedly includes traditional media leaders such as Warner Bros. Discovery's David Zaslav; Disney's Bob Iger and his potential successors Dana Walden, Alan Bergman, Josh D'Amaro and Hugh Johnston; as well as Netflix co-CEOs Ted Sarandos and Greg Peters; along with tech giants like from Amazon Andy Jassy and Jeff Bezos; and Apple CEO Tim Cook. While these heavyweights are frequent attendees of the conference, it is uncertain whether they will attend this year.

Shari Redstone, a regular attendee, is also on the guest list. Her attendance at the conference comes after her National Amusements, the controlling shareholder of Paramount Worldwideagreed to the media company's merger with Skydance after months of negotiations.

The dramatic deal process is likely to be discussed in all the conversations. But more importantly, Sun Valley could also be an important setting to advance the deal talks. The Skydance agreement includes a 45-day “go-shop” clause, meaning potential bidders still have time to submit their offers.

On a broader scale, the Paramount deal will serve as a backdrop for the broader discussion about the streaming business and how to make it profitable. In years past, media companies have chased high 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 single most important issue here is how these companies make streaming TV work for everyone globally,” said Neil Begley, an analyst at Moody’s Investors Services. “It’s either going to be more aggressive use of bundling services, or forming joint ventures, or mergers.”

Streaming Alliances

Shari Redstone, Chairman of Paramount Global, attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on Tuesday, July 11, 2023.

David A. Grogan | CNBC

Photo Alliance | Photo Alliance | Getty Images

Merging or setting up joint ventures is one route. Bundling services is a second route, and some media companies are moving on that front.

While Disney bundles its own streaming services (Disney+, Hulu, and ESPN+), it also partners with other companies.

Disney and Warner Bros. Discovery are planning to offer a bundle that is a mashup of Max, Disney+ and Hulu, launching this summer. The two companies are also joining Fox Corp. to offer a sports streaming service expected to launch in the fall.

“There will be real alliances, and there is a need for them, because media is desperate enough now that none of the traditional companies can do it alone,” said Jonathan Miller, CEO of Integrated Media, which specializes in digital media investments. “They’ve done all this and they’ve taken a beating.”

The idea, broadly speaking, is to get users in the door and watch their shows and movies, even at a discounted price. According to Begley, Sun Valley should have a discussion about raising streaming prices at premium levels and pushing consumers toward ad-supported options to maximize ad revenue.

“I think Sun Valley is going to focus more on the question of 'What do we do?' It's all these disparate media companies that used to be the rich and controlled Hollywood, but now they're not the kings they used to be,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners.

Sports Center

Dwyane Wade played in the NBA for 16 years.

Nathaniel S. Butler | National Basketball Association | Getty Images

While media rights negotiations at the NBA are still ongoing, sports will continue to be a topic of conversation at this year's meeting.

League commissioners, most notably the NFL’s Roger Goodell, are frequent attendees at the Sun Valley conference. Over the past year, streaming and tech players have claimed an even larger share of the space traditionally held by legacy companies.

The NFL has signed 11-year media rights deals worth more than $100 billion, and the league has shown that it believes streaming is an integral part of its future. Amazon is the exclusive home of “Thursday Night Football,” while Google’s YouTube TV recently acquired the rights to “Sunday Ticket.” Netflix recently said it would begin airing NFL games on Christmas Day.

Incumbent NBA rights holder Warner Bros. Discovery has been weighing whether to match a competing offer for the media rights as the league looks to make smaller package deals. The league is close to signing deals with Disney, NBCUniversal and Amazon, CNBC previously reported reported.

“Another big theme [at Sun Valley] “It's how deep we're going into sports,” Miller said. “It's pretty clear that the NBA is the last deal of its kind for the traditional players. In eight to 10 years, they're not going to be able to compete.”

Sports remains the glue that holds the traditional pay-TV package together and has also proven invaluable for streaming services. Live TV, particularly sports and to some extent news, has attracted the highest viewing figures.

“With sports rights not on the table for a while now, it's very likely that Amazon and Netflix are going to play a much bigger role the next time these rights come up,” Begley said. “The linear TV business is in decline and we're still a long way from making a profit from streaming; we're probably going to see the end of the dominance of traditional media when it comes to sports rights.”

Political talk

Former President Donald Trump (L) and President Joe Biden face off during the first debate of the 2024 presidential campaign, in Atlanta, June 27, 2024.

Andrew Harnik | Getty Images News | Getty Images

Politicians, economists and leaders of American universities are also among Sun Valley's regular participants.

In that sense, it's likely that the upcoming election will dominate “a lot of the conversation” in Sun Valley this week, Miller said.

Some business leaders have been waiting for the outcome of the upcoming election before pursuing megadeals, arguing that current regulations and high interest rates are hampering dealmaking.

And soon, the political conversation will likely turn to whether President Joe Biden will remain, or should remain, the Democratic Party's nominee after his disastrous performance at last month's debate.

In recent days, the largest party donors calling that Biden would resign.

A growing group of these dissenting voices and donors includes media heavyweights as Diller, Endeavor Group Holdings' Ari Emanuel, Netflix co-founder Reed Hastings and screenwriter Damon Lindelof — all of whom say they believe Biden should step aside to allow a new candidate to take his place. Former Disney Studios chairman Jeffrey Katzenberg is reportedly silent or whether his long-standing support for Biden has changed.

Meanwhile, Disney heiress Abigail Disney has said she will withhold funding from the Democratic Party until Biden withdraws.

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.

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Correction: This article has been updated to correct that former Disney Studios chairman Jeffrey Katzenberg is reportedly silent or his longstanding support for President Joe Biden has changed. An earlier version misstated Katzenberg's position.

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