Web, media leaders casting for ideas

SUN VALLEY, Idaho – When media and technology tycoons convene today for five days of dealmaking and outdoor recreation, the mountain air will carry more than a whiff of uncertainty as most arrive with their businesses in various states of disarray.

Powerful moguls come to Allen & Co. investment bank’s annual retreat seeking acquisitions and alliances and – increasingly in recent years – the opportunity to retool their businesses.

But this year both media and online leaders are grappling with the Internet’s increasing fragmentation. And they’re all looking for more advertising revenue online, where media companies have recouped only a small fraction of what they lost in print and where Web companies want to maximize their investments.

Even the top Internet companies – save maybe Google Inc. – are seeing revenue growth slowing as online audiences fragment. And they worry that, without steady access to high-quality content, they won’t be able to attract enough viewers to keep growing fast.

The flagging economy, slowing consumer spending and costlier capital on Wall Street will only add to any gloom and may prevent the summit, hosted for 25 years by investment banker Herb Allen, from living up to its reputation as an incubator for big deals.

These delicate dances among the Internet titans – unlikely before power began diffusing in the Internet and media worlds – underscore how tenuous a hold on power the top firms have. Even Google appears at a crossroads in the content vs. distribution dilemma as it dabbles in setting up its own newsgathering capabilities.

Time Warner CEO Jeff Bewkes appears to have decided the future is in producing content that can attract large audiences, not in controlling the means of distributing it: He is divesting Time Warner of both its cable property and the faltering AOL online access service. But what to do next isn’t clear.

“These companies’ identities and the way forward may not be as clear as in years past,” said Peter Kreisky, of Kreisky Media Consulting.

Indeed, what will these guys – and, aside from Yahoo President Susan Decker, the media and Internet worlds are still decidedly run by men – be talking about?

“How do you build or buy an industry leader in the digital world?” Kreisky suggested. “The business model to generate money online is still emerging.”