Monday, July 17, 2006

Sun Valley: Predators' Ball 2.0

Herb Allen (of boutique investment bank Allen & Company) has traditionally run a summer retreat for the biggest movers and shakers in media and technology in Sun Valley, Idaho. This year it's reported that financiers (hedge fund and private equity guys) have invaded the party, perhaps signalling a shift in the balance of power.

I once hoped for an invite to this event a few years ago, as one of our startup's investors (a hedge fund) was a regular attendee and its founder an Allen & Co. alumnus. Alas, the invite never materialized, but I did have several meetings with Allen & Co. bankers (one of whom turned out to be the son of a famous former Treasury Secretary) in their luxurious Manhattan offices and our not so exciting Oakland digs. The Manhattan offices are lushly carpeted, wood paneled and sound proofed. A remote control device on the oak table let us order coffee and drinks, delivered by a uniformed servant, during the meeting.

NYTimes DealBook: The annual mogul-fest that Allen & Company holds here every year is best known for A-list attendees like Rupert Murdoch of the News Corporation, Richard D. Parsons of Time Warner, Howard Stringer of Sony and Sumner M. Redstone of Viacom.

It is a conference that has taken on an almost supernatural reputation for deal making amid barbecues, discussion panels and whitewater rafting. (The seeds of Walt Disney’s acquisition of ABC/Capital Cities in 1996 were sown here.) But this year, the ones to watch were deep-pocketed people you may have never heard of, from the world of private equity and hedge funds.

“I walked into dinner last night and didn’t recognize three-quarters of the people there,” said the chief executive of one of the world’s largest media companies, who refused to speak on the record for fear of upsetting Herbert A. Allen of Allen & Company, who frowns on attendees talking publicly about the invitation-only conference, which ended yesterday. “It was all these hedge fund and finance guys I had never met before. The balance of power is shifting.”

The guest list at Mr. Allen’s conference, which began in 1982, may be the ultimate barometer of where the center of influence lies in corporate America and on Wall Street. For most of the 1980’s and early 90’s, the power players were Hollywood studio moguls like Barry Diller, then of Paramount, and Michael D. Eisner, formerly of Disney. By the mid-1990’s, cable and telecommunications executives like John C. Malone of Liberty Media and Brian L. Roberts of Comcast became the belles of the ball. In the late 1990’s and early 2000’s, technology and Internet executives like Stephen M. Case, the founder of America Online, and Jerry Yang, co-founder of Yahoo, were drawing crowds at the hotel bar.

Now, flush with billions in cash and the ability to borrow heavily on top of that, the private equity bigwigs and hedge fund managers have become the stars. Call it Predators’ Ball 2.0 — a kind of outdoorsy reprise of Michael Milken’s famous gathering of leveraged-buyout mavens of the 1980’s.

“We used to come here every year to sniff each other,” said the chief executive of another media company, who also did not want his name used. “Now, all these finance people are sniffing us.” With media stocks down virtually across the board, some may smell opportunity.

1 comment:

oli said...

Los Angeles private equity firms borrow new money into existence in order to take these companies private. They inflate the money supply and syphon off huge sums as personal compensation. All the while, the cost of everything goes up as the value of a dollar goes down.

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