By Andy Fixmer and Greg Miles
July 8 (Bloomberg) -- Media executives Sumner Redstone and Rupert Murdoch may find deal-making overshadowed by falling share prices at this year's Allen & Co. conference as they meet with investors who have lost a third of their money or more.
Viacom Inc. and CBS Corp., both controlled by Redstone, have declined 35 percent this year, more than twice the drop in the Standard & Poor's 500 Index. Murdoch's News Corp. is down 30 percent.
The share slump will put the economy and an advertising sales slowdown at the top of the agenda when the Sun Valley, Idaho, sessions start tomorrow, said David Joyce, an analyst at Miller Tabak & Co. in New York.
``This year's Sun Valley conference is going to be marked by concerns about the macro effects on their stocks,'' Joyce said. ``And it's really not going to be a very happy event.''
Since the first Allen conference, started by the New York- based investment bank in 1983, chief executive officers of the largest media and technology companies, including Time Warner Inc. and Walt Disney Co., have used the summer getaway to hatch deals, among them Disney's $19 billion purchase of Capital Cities/ABC Inc. in 1996.
CBS's $1.8 billion acquisition of Cnet Inc., completed last week, took root last year when the companies' CEOs met for the first time over dinner, Leslie Moonves, head of New York-based CBS, said in a July 2 interview. The meeting with Cnet's Neil Ashe was arranged by Quincy Smith, a former Allen & Co. banker who now leads CBS's Web businesses.
CBS, Cnet Deal
``It was more personal than business,'' Moonves said. ``Quincy had been telling us a lot about Cnet, a company he already knew very well. He set up dinner and I liked Neil immediately.'' San Francisco-based Cnet provides technology information and reviews online.
Based on previous attendance, investors going to this year's conference may include billionaire Warren Buffett; Mario Gabelli, CEO of Gamco Investors Inc.; Capital Research & Management Co. fund manager Gordon Crawford; and Bill Miller, chairman of Legg Mason Funds Management Inc.
Stockholders want the CEOs to repurchase their shares or find other ways to boost the lagging prices, Gamco fund manager Larry Haverty said in an interview.
``The message I think these people are going to hear at Sun Valley is `Look Mr. Media Executive, your stocks have been bad,''' said Haverty, who is based in Rye, New York. ``The market's sending you a message.''
Falling Shares
Viacom, the New York-based parent of the MTV and Nickelodeon cable-television channels, triggered investor concern on May 28, when CEO Philippe Dauman cut his second- quarter projection for advertising sales growth to 3 percent to 4 percent, citing weaker spending by automakers.
The shares fell almost 7 percent over the next two days.
On May 29, Moonves told an investor conference falling auto sales were hurting New York-based CBS's local television stations. The stock tumbled almost 5 percent over three days.
Viacom and CBS shares are lower than they were in January 2006, when Redstone split his media empire into two separately publicly traded companies.
Viacom spokeswoman Kelly McAndrew didn't respond to an e- mail seeking comment. News Corp. spokeswoman Teri Everett declined to comment.
Jerry Yang, CEO of Yahoo! Inc., who was at last year's Sun Valley event, may feel investor ire after he rejected Microsoft Corp.'s $47.5 billion offer to buy the Internet company. Microsoft CEO Steve Ballmer also attended previous conferences.
Proxy Fight
Carl Icahn, a Yahoo investor, moved to oust the company's board after talks with Microsoft broke down last month. Yang says Sunnyvale, California-based Yahoo is worth more than Microsoft offered. Microsoft said today it may revive the takeover talks if investors oust the board and Yang.
``He's going to get an earful, pure and simple,'' Haverty said of Yang. ``And I think he deserves it.''
Yahoo spokeswoman Tracy Schmaler and Microsoft spokesman Frank Shaw didn't immediately respond to phone messages requesting comment.
Yahoo rose $2.56, or 12 percent, to $23.91 yesterday in Nasdaq Stock Market trading, the most since Feb. 1. It has gained 2.8 percent this year. Redmond, Washington-based Microsoft gained 5 cents to $26.03 and is down 27 percent.
To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Greg Miles in New York at gmiles1@bloomberg.net
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