Media moguls puzzle over economy

SUN VALLEY, Idaho – Security is tight at investment bank Allen & Co.’s annual conference.

Held at the tony Sun Valley Resort nestled in the northern Rocky Mountains, the fairly secretive gathering of media kingpins, technology geniuses, billionaire investors, politicians and even the occasional star athlete is also filled with moonlighting detectives and retired police officers watching everyone and everything like a hawk.

What exactly are they guarding? The businesses of most in attendance here have already walked out the door, and no one seems to have a clue where they went. With the world’s economy mired in the recession, their advertising-dependent companies pummeled by consumers who have gone into hiding, and the Internet undermining the model that has made them all wealthy, the moguls who met under the glorious Idaho skies were a decidedly downbeat lot.

“I’m shocked at the business mood, which is talking about either that we’re at the bottom or going lower,” News Corp. Chairman and chief executive Rupert Murdoch said in an interview he gave during the conference to his Fox Business Network. He had just emerged from spending a morning with the most powerful people from Wall Street, Silicon Valley and Hollywood. What was the word from inside?

“It’s going to take years and years, like five years at least, before we see any real growth coming out of this,” Murdoch said.

“We don’t see things improving,” added Martin Sorrell, chief of WPP Group, one of the world’s largest conglomerates of advertising agencies and someone pretty close to knowing the willingness of companies to spend money.

Every summer for the past 27 years, Allen & Co.’s conference in Sun Valley has served as a sort of Davos for the media, entertainment and, increasingly, technology elite. The corporate chieftains, whose private jets crowd the tarmac at Friedman Memorial Airport in Ketchum, are not accustomed to defeat or negativity.

Nor were many of the moguls in the mood to party. Normally, the Duchin Lounge in the resort’s lodge is rocking past midnight during the week of the conference. This year, it was a ghost town by 11:30 p.m.

Google chief executive Eric Schmidt offered a sobering dose of reality, calling today’s economic environment “the new normal” and advising everyone to “figure out how to be happy and get our lives together in this new configuration.”

Sports is usually the safe haven from a bad economy, but no more. Roger Goodell, commissioner of the National Football League, which trimmed its staff by more than 10 percent last year, echoed Schmidt’s line about the new normal and added that his league will remain “slimmed down.”

This year’s “it” executive was Evan Williams, co-founder of Twitter, the popular social networking site.

But rather than sing praises of the fast-growing company, several moguls dismiss Twitter’s prospects. Barry Diller, chief executive of the sprawling Internet company IAG, and John Malone, chairman of cable giant Liberty Media, said in a closed door session that they didn’t see how Twitter could make money, people in attendance said. When Sony Corp. chief executive Howard Stringer was asked about Twitter and other social networking sites, he said “a lot of people are doing very well at making very little money. It’s not a club I’m looking to join.”

Many here agree that one of the keys to a turnaround is getting people to cough up some cash for the content they watch online for free. “People will get addicted and be willing to pay for it,” said Malone.

But Malone declined to say how, or when, that would come about. It was the same with Murdoch, who told his Fox Business Network that he has “a lot of plans I’m not ready to disclose yet” about how to get people to pay to read newspapers online.