PREVIEW - Media players plot survival in Sun Valley

By Robert MacMillan

NEW YORK (Reuters) - The global recession, shrinking advertising sales and fears that the Internet could render big media empires obsolete provide an ominous backdrop for executives at this week's Sun Valley conference.

Herb Allen's boutique investment bank Allen & Co has organized this retreat in the affluent mountain resort town in south-central Idaho every summer for 27 years, inviting guests such as Rupert Murdoch, Sumner Redstone and Barry Diller.

But never before have the media elite been harder pressed to find ways to survive and grow, whether through acquisitions or alliances that they forge over hikes, horseback rides and after-dinner drinks at this historical meeting ground for media and technology deal makers.

"People in the traditional media world are terrified," said Ken Auletta, a New Yorker magazine media writer and author of several books about the media industry, who will chair a panel on new media at this week's conference.

"They're in the analog world, and the world is becoming digital," he said. "They're insecure about what's going to happen to their businesses."

This year's conference from July 7-12 will feature panel discussions, including likely themes from globalization to U.S. President Barack Obama's handling of the financial crisis.

But the real action will be deal action. Last year, Sun Valley was about Microsoft Corp's failed bid to buy Yahoo Inc.

This year, the drama may lie with Time Warner Inc, Viacom Inc and CBS Corp as their executives stroll with a passel of rich money managers like Time Warner investor Vivi Nevo and Yahoo shareholder Gordon Crawford.