SUN VALLEY, Idaho — As the stock market lurches into bear territory, many of the media and Web kingpins who gathered here at the annual Allen & Co. conference have become preoccupied with the state of the economy — and what opportunities may arise in the downturn.

"We're all very concerned," said Scott Schoelzel, the legendary former portfolio manager at Janus Capital said. "The common observation is that the glass is half-empty right now, but people are also looking at opportunities to refill it."

The Sun Valley retreat has the reputation of being an incubator of major media deals — most recently Google Inc.'s acquisition of video-sharing site YouTube — but many participants said talks shifted away from acquisitions to broader discussions of the global economy and the U.S. role in it.

A panel discussion on the future of "Brand America" became contentious between News Corp. Chairman Rupert Murdoch and Thomson Reuters Corp. Deputy Chairman Niall FitzGerald, several participants said.

FitzGerald reportedly criticized U.S. foreign policy for putting American business at a disadvantage in the global economy, participants said. Murdoch, who earlier in the week said he was "a bit of a bear" on the stock markets, told reporters that the presidential election will give the U.S. image a shot in the arm — no matter the winner.

Murdoch was one of the more vocal attendees, along with Sony Corp. CEO Howard Stringer. The two were overheard complaining that the markets are undervaluing their stocks. News Corp. is down more than 30 percent for the year, while Sony is off by nearly 25 percent.

"The financial stress has spilled over to Main Street — it's in auto sales, food and energy," Stringer said. He was optimistic about Sony's business, even as the U.S. consumer begins to curb discretionary spending.

"People watched Shirley Temple in the Depression, so they'll watch us in this downturn," Stringer said.

NBC Universal President Jeff Zucker was also concerned that the worsening economy would start to have an effect on his business, which includes cable networks and a movie studio. His NBC network has been languishing in last place in the prime-time ratings race, leading to declining ad sales. NBC is part of General Electric Co.

"There's no question consumer-facing businesses are in trouble," he said, but pointed out that NBC has made several acquisitions in the past year, most recently plunking down $3.5 billion for the Weather Channel. "I think we'll hold up pretty well."

A closed-door presentation by DreamWorks Animation SKG CEO Jeffrey Katzenberg on the future of 3-D films drew rave reviews from participants — "He might have made a believer out of me," Stringer said — but investment guru Mario Gabelli said the U.S. needs to refocus its talents if it wants to remain competitive.

"We need to take the same talent that is here focusing on storytelling and put it into solving energy," the chief investment officer at Gamco Investors Inc. said. "We need a Manhattan Project for energy."

Gabelli said the economy would remain sluggish until the excess housing inventory is cleared and the financial institutions reduce their bad debt related to wrong-way bets on mortgage securities — at least another nine months.

Murdoch thinks the downturn will last until mid-2009, and said he'd be "happy" if the Dow Jones industrial average held at 11,000. It fell below that threshold early Friday for the first time in two years.

Not all participants were concerned about the economic malaise affecting their business, though.

"We make our own weather," Google CEO Eric Schmidt said. The Internet giant runs auctions to place ads next to search results, a business that has been growing steadily even as other advertising spending shrinks. "The Internet wins," he said.

And then there are the former media titans, like former Yahoo Inc. CEO Terry Semel and Time Warner Inc.'s ex-boss Richard Parsons, who mingled among the crowds with a decidedly more relaxed air. Parsons, in particular, seemed to be enjoying life after corporate America, strolling around and working the crowd in a polo shirt and CNN baseball hat.

"Once you've been kicked to the curb, you tend to find it's comfortable there," he joked.