Monday, Nov. 03, 2008

Selling Big Media

Sumner Redstone's media empire took a massive hit in October, as loan covenants on $1.6 billion of debt held by his National Amusements movie theater chain forced the 85-year-old mogul to sell some $233 million worth of CBS and Viacom stock. It was the tumbling share price of the two companies, where Redstone is controlling shareholder, that triggered the margin-call-like clauses in National Amusements's loans — and Redstone to sell at obscenely low prices. CBS stock was trading around its 10-year low. A month and a half later, Redstone cashed out of his 87% stake in videogame-maker Midway Games, selling it to a private investor for less than a penny a share while the stock was trading at 38 cents. Redstone's loss may have generated a massive tax benefit — but he still lost the bulk of the hundreds of millions of dollars he'd plowed into the company over the years.