Reuters
July 7, 2008 - 12:00 a.m. EST

NEW YORK (Reuters) - The deteriorating U.S. economy and slumping stock prices will frame discussions among top media and technology executives at the 26th annual Allen & Co confab in Sun Valley, Idaho, next week.

Talk of deals, investment picks and hot start-ups will still work their way into the meeting -- especially since attendees include News Corp's Rupert Murdoch, Google Inc's Eric Schmidt and Yahoo Inc's Jerry Yang.

But the tenor of the gathering -- renowned for being the birthing ground of big media mergers such as Walt Disney Co and Capital Cities/ABC in the mid-1990s -- will be decidedly somber.

Rising oil prices, a global credit crunch, housing market difficulties and the impact of slack consumer spending on the advertising market will likely inform lunchtime chatter by the duck pond at the Sun Valley Lodge.

"The big issue is how bad is the economy and how bad is the consumer and what happens to consumer-sponsored companies," said media investor Mario Gabelli, a fixture at the annual event.

Globalization, a recurring theme of years past, will take on new emphasis, as growth-strapped U.S. media companies chase opportunities overseas and vice versa. Steven Spielberg, for instance, is looking to Bollywood for financing and is said to be close to a $600 million deal with India's Reliance ADA.

Another topic will be U.S. politics, with the presidential election in November and Democratic candidate Barack Obama seen to be taking a more aggressive approach on enforcing antitrust laws should he be elected.

One of the reasons Microsoft Corp withdrew its offer to buy Yahoo was an anticipated delay in obtaining regulatory approval ahead of a new administration, one source told Reuters earlier this week.

MERGERS AND SPLITS

The six-month Microsoft-Yahoo deal debacle, which has seen just about every permutation of courtship among media and Internet companies, will be in the minds of many.

Besides Yang, Yahoo President Sue Decker will be in attendance, as will Time Warner Inc Chief Executive Jeffrey Bewkes and Disney CEO Robert Iger.

Microsoft CEO Steve Ballmer is not expected to attend due to a prior engagement, but deal-maker Henry Vigil, Microsoft's senior vice president of strategy and partnership, is expected to be a guest, as will recently retired Microsoft Chairman Bill Gates and his wife Melinda.

Google's Schmidt and co-founders Larry Page and Sergey Brin are expected to hold court. Google's Internet search advertising deal with Yahoo now faces a formal regulatory review.

Viacom Inc's $1 billion copyright infringement lawsuit against Google was the talk of the conference last year after top executives of both fired salvos in the press. It will probably take a back seat this time, with Viacom Executive Chairman Sumner Redstone expected to skip the 2008 pow-wow.

That would leave the chiefs of Redstone's Viacom split-offs -- Viacom Inc's Philippe Dauman and CBS Corp's Leslie Moonves -- to tussle among themselves.

A 2006 move to split apart Viacom's cable and movies division from its broadcast arms was hailed by Redstone as the end of big media conglomerates. But the open warfare between the two companies has sparked questions about the decision.

Viacom recently ended an agreement to supply films to CBS's Showtime Networks to launch a rival premium television network with Metro-Goldwyn-Mayer and Lions Gate Entertainment Corp.

That move and the stock prices of CBS and Viacom -- which have fallen more than 30 percent since the beginning of the year and which are now worth less than their pre-split levels according to Bernstein Research estimates -- have Wall Street wondering whether Redstone miscalculated.

But hope springs eternal. In the spirit of the conference, at least two attendees are betting that entertainment company mergers in a rapidly growing sector will fare better.

Video game publisher Activision Inc's CEO, Bobby Kotick, and Vivendi CEO Jean-Bernard Levy will be taking their victory lap at the conference, with the estimated $10 billion creation of Activision Blizzard expected to close next week.

(Editing by Gerald E. McCormick)