Streaming alliances are a priority

Media and technology giants will gather in Sun Valley this week to lay the groundwork for the future of streaming and potential partnerships.

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

Sun Valley's guest list reportedly includes traditional media leaders such as Warner Bros. Discovery David Zaslav; From Disney Bob Iger and his possible 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 titans like from Amazon Andy Jassy and Jeff Bezos; and Apple CEO Tim Cook. While these heavyweights are frequent attendees of the conference, it's not a given that they'll be there this year.

Shari Redstone, a regular attendee, is also on the guest list. Her participation in the conference will come after her National Amusements, the majority shareholder in the conference, Paramount Globalagreed to merge the media company with Skydance after months of negotiations.

The talks are likely to touch on the dramatic negotiation process, but more importantly, Sun Valley could also be a key venue for moving negotiations forward. Skydance's deal includes a 45-day “on-sale” clause, meaning potential bidders still have time to submit their offers.

On a broader scale, the Paramount deal will serve as a backdrop for a broader debate about the streaming business and how to make it profitable. In years past, media companies sought out huge numbers of subscribers in an attempt to outdo each other, but this time the focus will be on how to come together to make the complicated streaming business work.

“Certainly the really important issue here is how these companies make global TV streaming work for everyone,” said Neil Begley, an analyst at Moody's Investors Services. “It will be more aggressive use of bundling or forming 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 pace.

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’s future property said Monday on an investor conference call that they plan to explore partnerships or packages with other streaming players. Former NBCUniversal CEO Jeff Shell, who is set to become Paramount’s next chairman, said Monday that he sees packages and joint ventures as the future of the streaming business.

Paramount’s current leadership has also been in active discussions with other media and tech companies about merging Paramount+ with another streaming platform, CNBC previously reported.

“I personally believe that over time, the streaming world will look a lot like it did before. [pay-TV] “The world has looked back,” Shell said on Monday's call, adding that the consortium of investors buying Paramount has received calls from people interested in potential streaming partnerships.

Shell believes that eventually there will be a “one-stop shop” for all streaming apps for consumers. “If you’re in that package, you’re going to win. And if you’re not in that package, you’re in serious trouble,” he said.

One way is to merge or create joint ventures. The second way is to combine services, and some media companies have been taking steps in this direction.

While Disney offers 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 combination of Max, Disney+ and Hulu, launching this summer. The two companies will also team up Fox Corporation. to offer a sports streaming service scheduled to launch in the fall.

“These will be real partnerships and they will be necessary because the media is so desperate that none of the traditional companies can do it alone,” said Jonathan Miller, chief executive of Integrated Media, which specializes in digital media investments. “Everyone has realized this and they've already taken enough hits.”

The idea, broadly, is to entice users to watch its shows and movies, even at a reduced price. Begley said Sun Valley should include a discussion about raising streaming prices at premium tiers and encouraging consumers to opt for ad-supported options to maximize advertising revenue.

“I think Sun Valley is going to be more focused on, 'What do we do?' It's all these diverse media companies that used to have deep pockets and control of Hollywood, and now they're not the kings that they were,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners.

While negotiations over NBA broadcast rights 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 regulars at the Sun Valley conference. Over the past year, streaming and technology players have claimed an even larger share of the space that has traditionally been in the hands of traditional companies.

The NFL signed 11-year streaming rights deals valued at more than $100 billion, and the league has shown it believes streaming is critical to 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 streaming NFL games on Christmas Day.

Warner Bros. Discovery, the current rights holder for the NBA, has been weighing the possibility of matching a competitive bid for streaming 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 great topic [at Sun Valley] “The question is how far are we going to go in the sport,” Miller said. “It's pretty clear that the NBA is the last such deal for traditional players. Eight or 10 years from now, they won't be able to compete.”

Sports remain the glue that holds the traditional pay-TV package together and have proven invaluable to streaming services as well. Live TV, especially sports and to some extent news, have attracted the largest audiences.

“With sports rights no longer on the table for quite some time, the next time they emerge it's likely that Amazon and Netflix will play a much bigger role,” Begley said. “The linear TV business is in decline and streaming is a long way from turning a profit; we're likely to see the end of traditional media dominance when it comes to sports rights.”

Sun Valley also counts among its regular roster of attendees American politicians, economists and university leaders.

In that sense, the upcoming election is likely to “dominate much of the conversation” in Sun Valley this week, Miller said.

Some business leaders have been waiting for the outcome of the upcoming election before trying to close megadeals, feeling that the current regulatory environment and high interest rates have been a cold shower for deal-making.

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

In recent days, major donors to the party have been calling for Biden to resign.

A growing group of dissenting voices and donors includes media heavyweights like Diller, Endeavor Holdings Group' Ari Emanuel, Netflix co-founder Reed Hastings and screenwriter Damon Lindelof, and former Disney Studios chairman Jeffrey Katzenberg all said they believe Biden should step aside to allow a new candidate to take his place.

Meanwhile, Disney heiress Abigail Disney has said she will 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.