The River Runs and so Does Bile at Allen Retreat

There will be more bad blood running through Herbert J. Allen’s famed corporate retreat in Sun Valley, Idaho, this week than water rushing through the nearby Salmon River, where his media mogul guests go white-water rafting.

Many of the titans invited to the Wall Street investment banker’s mountain getaway are now warring in courts, turning Sun Valley into what one guest termed “Litigation City,” as about 150--nearly all men--pull into town for the conference, which runs Wednesday through Sunday.

“The people who go have such disdain for each other,” one attendee says. “It’s very hard to capture the spirit of what he [Allen] had with the karma that now invades the conference.”

For more than a decade, such Hollywood bigwigs as Rupert Murdoch, John Malone, Sumner Redstone, David Geffen and Barry Diller have been beckoned by Allen to hobnob once a year with mega-financiers like Warren Buffett and chiefs of mega-corporations like Coca-Cola Co., Microsoft Corp. and Nike Inc.

Significant deals have germinated there, including Walt Disney Co.’s $19-billion acquisition of Capital Cities/ABC, which grew out of a chance meeting in a parking lot two years ago among Disney Chairman Michael Eisner, ABC shareholder Buffett and ABC’s former chief, Tom Murphy.

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Deal-making is supposed to be secondary to fun, and guests are encouraged to bring their families for such relaxing activities as a wagon ride to Trail Creek Cabin, a children’s kickball game, fly-fishing and skeet shooting.

But imagine what fun it would be to go river rafting with Seagram Co. chief Edgar Bronfman Jr. and the hot-tempered Redstone, who essentially accused each other of lying during court testimony last year over the fate of the USA Network, which is jointly owned by their companies, Universal Studios Inc. and Viacom Inc., respectively. To make the adventure even more rugged, Bronfman could invite along Universal Chairman Frank Biondi Jr., also no big fan of Redstone since being dismissed by his former Viacom boss.

Eisner will not be attending for the second consecutive year, and some say it’s because he’d rather not go horseback riding with his former studio head, Jeffrey Katzenberg, who is suing the Magic Kingdom for $250 million in what promises to be a heated upcoming court battle.

Nor will Eisner presumably be missed by his former best friend Michael Ovitz, who will be on hand, though he’s currently unemployed. The two have been estranged since Eisner gave the former super-agent a $100-million- plus severance package to go away as Disney president.

But Ovitz may not be able to avoid Ron Meyer, the president of Universal, who assuredly would rather eat skeet than go trapshooting with his former longtime partner at Creative Artists Agency.

There’s also no love lost between Eisner and Murdoch, who are fighting in court over cable sports rights. The pending suit by Murdoch’s News Corp. against Time Warner Inc. over cable news makes it unlikely that Murdoch will invite his counterpart, Time Warner chief Gerald Levin, to the gathering’s Western barbecue. And you won’t see Murdoch and Diller hiking together, given their stormy history during Diller’s days working for the Australian tycoon at Fox.

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One guest suggested Allen hire an arbitrator this year to promote peace.

“People’s egos are out of control. . . . We’re all paid too much,” conceded the executive, explaining the hostilities.

An Allen spokesman disputes any signs of tension and claims that some guests are actually staying longer than they used to. However, some high-powered Hollywood types say they plan on spending only one to three days at the most.

The mood at the conference began to darken last year, when many entertainment stocks started showing the wear of carrying heavy debt. Many executives still have little to crow about. Redstone, whose Blockbuster video group just took a huge write-off, canceled a scheduled presentation on Viacom for Saturday.

Some Hollywood players complain that the corporate presentations and panel discussions have become boring and uneventful and that guests never ask presenters provocative questions.

“I think it’s passe and has lost its sizzle,” said one heavy-hitter who no longer attends. “It used to be fun, now I think people hate it.”

One guest said the gathering has become “a club within a club” because Allen shows social favoritism to such coveted billionaires as Gates and Buffett. Some say the annual gathering has lost some of its “secret society” mystique, to which Allen himself in part may contribute.

The phobically press-shy investment banker threatens that guests won’t be invited back if they talk about the affair to the media. Yet, once again he’s allowing Vanity Fair magazine to shoot a group photo of the celebrity moguls on Friday, as the magazine did in 1994, for its upcoming New Establishment issue. There was some industry scuttlebutt about whether Ovitz should be included in the photo--illustrating Hollywood hostilities extraordinaire.

Several perennial guests say they go to the conference out of loyalty to Allen. His firm, Allen & Co., has brokered some of Hollywood’s biggest transactions, including Seagram Co.’s $5.7-billion purchase of Universal.

Allen is supposedly helping his pal Ovitz raise money. Sources say one idea that’s been floated by Ovitz is patterned after First Artists, an independent production cooperative that folded five years after being founded in 1969 by then super-agent Freddie Fields and such stars as Paul Newman, Barbra Streisand, Sidney Poitier and, later, Steve McQueen and Dustin Hoffman. Ovitz’s vision, sources say, is that a cooperative of directors and producers would pick and own their own movies.

For many, the Allen retreat is still a breeding ground for developing new relationships and cultivating existing ones.

“For me, it’s a gigantic home run . . . it’s invaluable,” says Katzenberg, whose DreamWorks SKG, also owned by Geffen and Steven Spielberg, is hardly in search of capital.

“It’s an extraordinary opportunity to catch up and spend time with people whose paths I don’t naturally cross,” Katzenberg says. Over the years Katzenberg has fostered relationships with such heavyweights as Intel Corp. chief Andrew Grove and Gates.

It’s also still considered a badge of honor to be invited for the first time.

Among the newcomers this year are Nobuyuki Idei, the Hollywood star-struck head of Sony Corp., who will be flanked by his newest recruit, Howard Stringer (head of the New York headquarters); Reed Hundt, the outgoing chief of the Federal Communications Commission; and Brad Grey, the ambitious co-founder of Brillstein-Grey Entertainment, a talent management firm.

Ovitz and three others--former Sony Corp. of America head Michael Schulhof, former Warner Music chief Michael Fuchs and former Liberty Media Corp. honcho Peter Bartonis-- are invited as “unaffiliated” guests.

Conspicuously missing from the roster this year are the phone companies, which have retreated over the last year from their video investments. But cable operators seem to be back in full force, represented this year by Comcast Corp., Cox Enterprises Inc., Time Warner, Tele-Communications Inc. and US West Media Group.

The coming age of digital television will take center stage on Friday morning, when Grove will moderate a session titled “Technology and Media: What to Do About the Digital Barbarians at the Gate.” Bronfman, Hundt, Levin, Geffen, Murdoch and Diller are expected panelists.

And while no big deals may be hatched this year, the hostilities could generate some colorful copy. Maybe Bronfman will throw Redstone into the Salmon River, or maybe Redstone will bite off Bronfman’s ear.

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The Moguls Meet

A partial list of executives and officials planning on attending this year’s Allen & Co. conference:

America Online

Stephen M. Case, chairman

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Archer-Daniels-Midland

Dwayne O. Andreas, chairman

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Ascent Entertainment Group

Charles Lyons, president

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Berkshire Hathaway

Warren E. Buffett, chairman

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Bet Holdings

Robert L. Johnson, chairman

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Brillstein-Grey Entertainment

Brad Grey, chairman

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British Broadcasting Corp.

Christopher Bland, chairman

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Canal Plus

Pierre Lescure, chairman

Alex Berger, chief of staff

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Chase Manhattan Bank

James B. Lee Jr., vice chairman

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Chris-Craft Industries

Herbert J. Siegel, chairman

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Classic Sports Network

Brian T. Bedol, chief executive

Stephen D. Greenberg, president

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Coca-Cola

Roberto C. Goizueta, chairman

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Comcast

Ralph J. Roberts, chairman

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CUC International

Walter A. Forbes, chairman

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Digital Bandwidth

David B. Weinberg, president

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DreamWorks SKG

David Geffen

Jeffrey Katzenberg

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Eastman Kodak

George M. C. Fisher, chairman

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Electronic Arts

Lawrence F. Probst III, chairman

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Federal Communications Commission

Reed Hundt, chairman

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Gateway 2000

Theodore W. Waitt, chairman

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Geico

Louis A. Simpson, president

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Gibson Greetings

Frank J. O’Connell, chairman

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GSI Group

Howard G. Buffett, chairman

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HSN

Barry Diller, chairman

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Hughes Telecommunications & Space

Steven D. Dorfman, chairman

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Intel

Andrew S. Grove, chairman

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International Creative Management

Jeffrey Berg, chairman

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Island Records

Christopher P. Blackwell, chairman

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Jim Henson Productions

Charles H. Rivkin, president

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Joseph E. Seagram & Sons

Edgar Bronfman Jr., president

Frank J. Biondi Jr., chairman, Universal Studios

Ronald M. Meyer, president, Universal Studios

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Mattel

Jill E. Barad, president

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Microsoft

Bill Gates, chairman

Nathan P. Myhrvold, chief technology officer

Pete Higgins, group vice president, interactive media division

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Motion Picture Assn. of America

Jack J. Valenti, chairman

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NBC

Robert C. Wright, president

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News Corp.

Rupert Murdoch, chairman

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Nike

Philip H. Knight, chairman

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Paul Allen Group

Paul G. Allen, chairman

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Quark

Fred Ebrahimi, president

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Rastar Productions

Ray Stark, chairman

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Reed Elsevier

Nigel J. Stapleton, chairman

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Republic Industries

Steven R. Berrard, president

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RRE Investors

James D. Robinson III, chairman

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Saban Entertainment

Haim Saban, chairman

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Sony

Nobuyuki Idei, president and representative director

Howard Stringer, president, Sony Corp. of America

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Tele-Communications

John C. Malone, chairman

Leo J. Hindery Jr., president

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Television Azteca

Ricardo B. Salinas Pliego, president

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Ticketmaster Group

Fred D. Rosen, president

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Time Warner

Gerald M. Levin, chairman

Richard D. Parsons, president

Terry S. Semel, chairman, Warner Bros. and Warner Music Group

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Tribune

John W. Madigan, chairman

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US West Media Group

Charles M. Lillis, president

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Viacom

Sumner M. Redstone, chairman

Jonathan L. Dolgen, chairman, Viacom Entertainment Group

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Washington Post

Katherine Graham, chairman of the executive committee

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World Group of Cos.

John Heyman, chairman