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Equity Fund, Internet Stars in Spotlight at Sun Valley Schmoozefest

Media deals remain big at the event. Among the rumors: Murdoch is about to get EchoStar.

July 17, 2006|Sallie Hofmeister and Thomas Mulligan | Times Staff Writers

SUN VALLEY, Idaho — Since it began in 1983, the annual conference for top money managers and investors sponsored by Wall Street power broker Herbert Allen Jr. has been a barometer of the shifting sands of the media landscape.

In the early days, News Corp. Chairman Rupert Murdoch and maverick cable TV tycoon John Malone were the top draws of the exclusive event. At this year's event, held last week at the Sun Valley Resort, Internet billionaires were the belles of the ball.

Yahoo co-founder Jerry Yang was on everyone's to-meet list in 1999 -- his first appearance at the five-day event. And two years ago, Google co-founders Sergey Brin and Larry Page were the hottest tickets.

Holding a full dance card this year: Chad Hurley, co-founder of YouTube Inc., a website with an extensive, searchable video library. In recent months it has surpassed the traffic of such leading Internet news providers as and because of the popularity of the clips in its library.

The 29-year-old newcomer, however, was not the only guest in the limelight this year, signaling perhaps another trend in media.

Jonathan Nelson, chief executive of Providence Equity Partners Inc. of Rhode Island, was in the spotlight this year, emerging as the media industry's leading deal maker.

"He's the big cheese of the moment," said one guest, who did not want his name mentioned because Allen likes to keep the goings-on at the conference a secret.

In the past, big deals have gone down here such as Disney's $19-billion purchase of ABC Inc. and ESPN, and its later $5.2-billion acquisition of what is now known as the ABC Family channel.

But as traditional media companies have struggled with maturing markets and sagging stock prices, private equity funds have emerged as a rich source of buyout capital. Providence and several other private equity funds, for instance, bought out Metro-Goldwyn-Mayer Inc. in a $5-billion deal that was in the works here last year.

And it was Providence that last month led a group of investors in a $12-billion bid to buy Univision Corp., the nation's leading Spanish-language broadcaster.

At the conference, the agreement was on display again Wednesday night. Providence's Nelson was huddled in a resort lounge with his Univision partner, Los Angeles billionaire Haim Saban.

One subject under discussion: whether to invite onto their team another company that had made the trek to Sun Valley, Grupo Televisa.

Televisa not only was the losing bidder for Univision but also is the largest supplier of programming to the broadcast network. After losing the auction, Televisa said it wanted to sell its 11% stake in Univision.

But sources in the know in Sun Valley said that the network's prospective new owners were in talks with Televisa. In a meeting here with Nelson, Televisa's top management proposed contributing Internet and video-on-demand programming rights that Univision does not now control -- as well as about $1 billion in cash.

In exchange, sources said, Televisa wants to hike its ownership of Univision to 25%, the maximum stake in a U.S. broadcaster that a foreign entity is legally allowed to own.

Providence was expected to confer with its partners over the weekend and get back to Televisa before a board meeting scheduled for today. At the meeting, Televisa is expected to weigh the proposal against two alternatives: selling its Univision stake or mounting a new bid.

On Thursday in Sun Valley, as other guests attended the morning panels, the Univision talks continued. Televisa Executive Vice President Alfonso de Angoitia was locked in a discussion at a table by the resort's duck pond with banker James Lee of JPMorgan Chase.

Univision was not the only piece of business for Nelson. As other guests went fly-fishing, hiking and biking Thursday afternoon, Nelson took a couple of hours out of his schedule to play golf with CBS Corp. chief Leslie Moonves.

Strictly pleasure? Not a chance. Moonves has made no secret of his interest in making movies at CBS. Some say MGM, within Providence's portfolio, could be in his sights.

Other snippets from the conference:

* Several titans in attendance speculated that Murdoch was working on a deal.

"Rupert is very preoccupied this year," said one of his competitors. "He's working on something."

Some top money managers here were convinced Murdoch was close to making a deal to buy EchoStar Communications Corp., the nation's second-ranked satellite TV provider and the sole rival to Murdoch's DirecTV Group.

Echostar founders Charles and Candy Ergen, here with four of their five children, tried to purchase DirecTV three years ago but were blocked by federal regulators worried about a monopoly. Murdoch seized control afterward.

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