Latest From Sun Valley: Media Moguls Talk Shifting Streaming Priorities, Frugality in Uncertain Times

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What the billionaire executives are saying from the Allen & Co. conference about the deal-making market and future industry moves

David Zaslav Sun Valley Media Conference
Warner Bros. Discovery CEO David Zaslav attends the 2022 Sun Valley Media Conference. (Photo by Kevin Dietsch/Getty Images)

Despite harsh economic conditions, the door to dealmaking remains wide open as billionaire executives such as Liberty Global CEO Mike Fries look for advantageous opportunities at this year’s Allen & Co. Sun Valley Media Conference. Fries is focused on “growing and executing” across Liberty Global — which oversees business in mobile, broadband and media content sectors — as financial storm clouds gather on the industry’s horizon.

Of course, it helps that Liberty is sitting on $4 billion in cash which provides some much-needed flexibility to maneuver in uncertain times.

“We’re always open-minded on the M&A front as both buyers and sellers if it makes sense” Fries told CNBC. “Most of our effort is going into the markets we’re in. So in the U.K., for example, we’re the largest mobile company, we’re the most the most important broadband company I think. There might be opportunities in that market to continue to rationalize whether its fiber, content or fixed.”

Fries is also reading the tea leaves when it comes to the entertainment industry, where many expect additional consolidation to come after years of media proliferation and streaming expansion. Wall Street’s pendulum swing against the Netflix model and an increased scrutiny being placed on content budgets has Hollywood looking over its shoulder.

“I think so,” Fries said when asked if he expects additional consolidation in the near future. “I think you might see some content assets, not necessarily ours or with us or by us. But studios have inherent value and as Netflix or others look to stay local, we own interest in ITV and All3Media, so we have some studio assets that may be interesting.”

Who knows — maybe we might all look back on this year’s Sun Valley conference as the nexus point of the industry’s next dramatic shake-up.

“I do feel like there’s going to come a point where people are going to stop adding subscriptions and companies may possibly close down some of their subscriptions,” a national media buyer told TheWrap. “There are too many over-the-top services out there.”

Here are a few more takeaways from the early days at billionaire summer camp.

David Zaslav wants quality, not quantity

In a financially motivated move, HBO Max halted production in select European countries earlier this week as newly formed parent company Warner Bros. Discovery eyes $3 billion in cost savings. Perhaps we shouldn’t be surprised given WBD CEO David Zaslav’s comments Tuesday at Sun Valley.

When discussing the current “turmoil” in the industry, Zaslav admitted that it creates “a lot of opportunity,” but he didn’t sound like a man prepared to expand his company’s programming portfolio.

“Warner Bros. Discovery’s got great, quality content,” he told Variety. “So I think the world has changed. And it’s not about how much, it’s about how good. And so we’re pretty excited about our new company and getting to see everybody in this beautiful setting. It’s going to be a lot of fun.”

Zaslav has already moved to pull many of WBD’s basic cable channels, such as TBS and TNT, out of scripted content. And while the company is spending around $33 billion on content this year, the leadership has said the company doesn’t want to win the “spending wars.”

This sentiment is expected to extend to WBD’s streaming efforts with Discovery+ and HBO Max set to be merged into one service at some point in the future. “We’ll talk about how we’re going to do it, and when, soon,” Zaslav teased.

Media comes crawling back to linear TV

As media companies reoriented around streaming in recent years to chase the elusive Netflix stock price multiple, linear television became the entertainment industry’s forgotten child. Dissed and dismissed as a declining business despite billions in quarterly revenue, pay TV has suddenly made a roaring comeback as Wall Street’s confidence in the streaming model evaporates.

As such, perhaps we shouldn’t be too shocked that Disney CEO Bob Chapek has apparently reversed course on his desire to spin off ESPN, according to Puck News. Disney didn’t immediately respond to TheWrap’s request for comment.

Live sports remain the moneymaking calling card of traditional television and ESPN boasts a bundle of games. Yet even as the tried and true revenue of linear TV offers a lifeline to media companies that have gone all-in on streaming, a looming recession complicates matters.

“Brands that typically pull their advertising during a recession are the ones that often have a harder time when they come back,” the national media buyer said. “Brands that stay the course, even if at low levels during a time where might is tight, tend to excel because they remain out in the marketplace building awareness and building their brand equity.”

Advertisers often rein in marketing money during tough economic times, which has a trickle-down effect across the entire entertainment field. The sports economy was hit hard during the first year of the pandemic, with ancillary revenue drying up and TV ratings plummeting. Should America enter another recession, the side effects will reverberate throughout Hollywood and that won’t just be a Disney-ESPN problem.

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