Economy casts pall on Sun Valley media fest

By Kenneth Li

NEW YORK (Reuters) - The deteriorating U.S. economy and slumping stock prices will frame discussions among top media and technology executives at the 26th annual Allen & Co confab in Sun Valley, Idaho, next week.

Talk of deals, investment picks and hot start-ups will still work their way into the meeting -- especially since attendees include News Corp's Rupert Murdoch, Google Inc's Eric Schmidt and Yahoo Inc's Jerry Yang.

But the tenor of the gathering -- renowned for being the birthing ground of big media mergers such as Walt Disney Co and Capital Cities/ABC in the mid-1990s -- will be decidedly somber.

Rising oil prices, a global credit crunch, housing market difficulties and the impact of slack consumer spending on the advertising market will likely inform lunchtime chatter by the duck pond at the Sun Valley Lodge.

"The big issue is how bad is the economy and how bad is the consumer and what happens to consumer-sponsored companies," said media investor Mario Gabelli, a fixture at the annual event.

Globalization, a recurring theme of years past, will take on new emphasis, as growth-strapped U.S. media companies chase opportunities overseas and vice versa. Steven Spielberg, for instance, is looking to Bollywood for financing and is said to be close to a $600 million deal with India's Reliance ADA.

Another topic will be U.S. politics, with the presidential election in November and Democratic candidate Barack Obama seen to be taking a more aggressive approach on enforcing antitrust laws should he be elected.

One of the reasons Microsoft Corp withdrew its offer to buy Yahoo was an anticipated delay in obtaining regulatory approval ahead of a new administration, one source told Reuters earlier this week.