MediaFile

Redstone + Viacom = True Love Always

November 4, 2008

A couple of things we know about Viacom in the aftermath of its earnings report: Sumner Redstone is madly in love with the media company, and he is still not selling any more shares.

It’s interesting that Redstone has repeatedly insisted that he won’t sell any more shares in Viacom or CBS to take care of the debt problems at his privately-held National Amusements (Recall, he sold about $230 million of stock in Viacom and CBS last month).

Sure, he’s assuaging the immediate concerns of investors, who obviously don’t want to see more shares on the open market. But he’s also backing himself into a corner (of course, he can always do what he wants, even sell shares after he said he wouldn’t, but he does have a reputation to think about).

So, what does that mean? National Amusements has $800 million in debt that comes due in December. Redstone and his advisers are trying to restructure the debt, but clearly the company need to raise some money to get a handle on its loans.

There has been much talk on the subject — and several alternatives seem to be favored right now among the chattering classes since share sales have been taken off the table. 1). Selling part of National Amusements movie theater chain, or some of its real estate holdings 2). Selling a stake in National Amusements 3). Selling video game company Midway Games.

Redstone, speaking on the Viacom call, didn’t shed much light on the situation. Read for yourself:

National does not intend to sell one more share of stock in Viacom or CBS. Also please note, National is more than just its stockholders. Among its assets are a substantial and valuable theater operation built, for the most part, on land which we own, something I always insisted on, unlike most of our competitors, which means we have valuable real estate holdings throughout the country.
      
I have been advised that National’s talks with its lenders are very constructive. They are ongoing and I can assure you that a resolution is expected within a reasonable time frame. So I am optimistic not only about Viacom, the love of my life, of course, but also about National.

Keep an eye on:

  • Rodale Inc., the publisher of Men’s Health, Prevention and Runner’s World, is cutting 10 percent of its work force, or about 111 jobs (WSJ.com
  •  Yahoo  and Google have drastically scaled back the scope of their search advertising deal, a person close to the discussions said (Reuters)
  • NBC Universal’s chief digital officer, George Kliavkoff, is stepping down at year’s end (AdWeek)

(Photo: Reuters)

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WITHOUT A DOUBT VIACOM IS THE WORST COMPANY IN WORLD

 

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