As we previously noted in MediaFile the main takeway from Viacom’s earnings call was that advertising is awful, but it’s not getting worse. But there were a few other highlights, too, so here’s a time-saving rundown:

Sumner Redstone is still a gigantic fan of Philippe Dauman. Even after 12-months in which Viacom’s stock price has dropped 50 percent, Redstone introduced Dauman as “my great friend” and “the greatest CEO of all” while crediting him “capable and insightful leadership.”

National Amusement’s movie theaters are a hot ticket. Redstone said the sale of theaters in the United Kingdom and United States has attracted “substantial preliminary interest” from buyers. “”We are very encouraged by both the number of interested bidders and particularly the prices being discussed.”

Dauman isn’t sweating Epix. Asked what happens to the bottom line, worst case, if the movie network isn’t launched on the terms that Viacom wants, Dauman responded that, “There is not a worst case here. We are quite engaged in discussions. You will see the affiliate agreements being announced as we get closer to launch. So we are in good shape and furthermore, in addition to covering the movie costs on the Paramount side, we are creating a great new asset for Viacom and as well as our partners.

(Photo: Reuters)

Deal-making in the U.S. media and entertainment sectors is going to be down this year, says a new PricewaterhouseCoopers survey (request a copy here). Now, that’s not a new or startling conclusion given the state of the economy, but it’s just another piece of evidence that when consumers and advertisers get thrifty, deal makers can end up become benchwarmers as companies struggle with cost cuts and other exigencies.

Here are some industry trends for 2009 from the PWC survey:

• Declining consumer spending is hitting many media and entertainment companies. What’s more, these declines were exacerbated by technological convergence, as these firms adapt to and look for ways to make money off new Internet technologies.
• Overall U.S. advertising market is going to shrink as sponsors cut ad budgets across retail, consumer goods, automotive, financial and other sectors.
• Companies will continue to divest their non-core assets, but those that don’t get a good price will prefer to hold on rather than sell at bargain prices.
• Bolt-on deals will likely be popular for risk-averse companies, so deals below $1 billion — mostly small and mid-market companies — will be a rising trend.
• Private equity will remain quiet since the debt markets aren’t really healthy yet.
• Deal structures will change this year, given the difficulty of getting debt financing. The strategic rationale for doing a deal will be more important than getting a favorable capital structure.

But all hope is not lost, according to PWC’s Transaction Services Entertainment & Media Leader Thomas Rooney:

With M&A activity ingrained in the DNA of so many companies and the ever growing presence of private equity, E&M deal activity might not be as quiet as many expect in 2009… History has shown the E&M industry to be one of the more active M&A sectors irrespective of market and economic conditions.

And there have been a couple of deals already this year, although no mega-transactions, as the PWC report suggests. Live Nation wants Ticketmaster and Sumner Redstone’s National Amusements theater chain is being shopped to potential buyers. Could Lions Gate be next?

(Photo: Viacom chairman Sumner Redstone/REUTERS)

Here’s the latest on Sumner Redstone: On CBS’s earnings call he reiterated that negotiations with lenders regarding National Amusements’ debt situation were moving forward.

“We are making very good progress with our creditors, and as I have also said before, we have not, since our original sale, sold a single share of CBS or Viacom, and our lenders are not urging us to do so,” he said.

He also told investors that the CBS dividend cut — they slashed it by 82 percent to 5 cents — wouldn’t mean a thing as far as National Amusements’ debt talks go (How the dividend cut will impact Redstone himself is another matter. Last year, he took home more than $80 million in dividend payments).

“Now with respect to the CBS dividend, I can tell you that the topic has been discussed with the lenders, and it will not impact the successful conclusion of the discussions. So that’s the update, and again, because of the ongoing nature of the discussions, I must decline to further comment,” he said.

Redstone may not be commenting further, but there is certainly some chatter about what’s happening with National Amusements. People familiar with the matter tell us that National Amusements is close to putting several hundred movie theaters up for sale.

Here’s the upshot:

An official sales prospectus on the theater chain is expected to go out any day now and bankers are reaching out to potential buyers to get them to sign confidentiality agreements, the sources said.

All U.S. theaters except those in the New England region are expected to go on sale, along with theaters in Latin America and possibly those in the United Kingdom. The theaters in Russia will be excluded from the sale, the sources said.

National Amusements operates more than 1,500 movie screens in these countries. The New England region and Russia account for roughly 300 screens. Citigroup Inc will handle the sale, the people said.

A sale could help National Amusements pay off the $800 million in bank loans it has due — or at least part of the payment. Analysts figure the theater chain could fetch up to $500-700 million. It’ll be up to Redstone to figure out how to make those numbers work.

Keep an eye on:

• Walt Disney Co will streamline some behind-the-scenes operations, including menu planning and ride design, at its two U.S. theme parks to try to offset the effects of the global economic downturn (Reuters)
• Entertainment industry jobs in the Los Angeles area will fall further in 2009 after an annual decline in 2008, according to a research report (Reuters)
• The New York Post faced widespread criticism for a cartoon it published that some say compares President Barack Obama to a chimpanzee (WSJ.com).

Media mogul Sumner Redstone appears to be sticking with his decision to not sell more shares in Viacom and CBS. Here’s the Financial Times:

Media mogul Sumner Redstone has reached agreement with his daughter, Shari, to put some of National Amusement’s 1,500 cinemas on the block rather than the entire division, as part of debt-restructuring discussions to avoid selling more shares of Viacom and CBS, according to people familiar with the matter.

If lenders agree, the plan would clear the way to sell a part of the US group and 19 theatres in the UK. A prospectus is not expected to be released until early January, one person familiar with the discussions said.

It was not immediately clear how much the proposed partial sale would fetch. The entire chain is valued at $500m to $700m by analysts and at about $1billion by Mr Redstone.

This comes after National Amusements sold its stake in video game company Midway for $100,000 and a big tax writeoff.

As you’ve read here before, Redstone is trying to restructure about $1.6 billion in debt. Half of that, as the FT notes, is due December 19 (only 15 more shopping days until debt day!). Redstone is in this position after he blew a debt covenant that was tied to Viacom’s and CBS’s market value. Both stocks took a dive, which forced Redstone into selling $233 million in non-voting shares of both companies, the FT reported.

Meanwhile, we asked Regal Entertainment CEO Mike Campbell if he would be interested in buying National Amusements’ theater chain If Redstone does put it on the block. Cambell said their domestic theaters would be a good fit — but noted that the credit crunch could hinder financing.

Keep an eye on:

Our Reuters Media Summit: We’re heading into the last day, but have a look at our interviews with Sirius XM CEO Mel Karmazin, Microsoft videogame executive Shane Kim, Professional Golfers Association Commissioner Tim Finchem and more. We’ve been running Summit blog entries here on Mediafile, but they’re all in one convenient place at the Summit Notebook site too.

You can’t have too much Michael Wolff. Here’s Wolff in a video interview with me.,

Former New York Governor Eliot Spitzer, who resigned earlier this year after patronizing a prostitute, is entering the journalism world with a column at Slate.com, the online magazine owned by The Washington Post Co. Reported by Reuters, but broken by the New York Observer’s John Koblin.

(Photo: Reuters)

Sorting out what the economic downturn means for the sports world has become something of a sport itself.

Will consumers’ need to escape with some old-fashioned football trump their anxiety about shelling out hard-earned money for tickets, parking and hotdogs at the game?

Will TV broadcasters cash in on higher ratings, as consumers skip more expensive entertainment to spend time at home watching baseball or basketball on television? Or has devastation across the financial services and auto industries — two big advertisers in sports — doomed TV broadcasters regardless of audience size?

We already know what happened with GM and Tiger Woods.

“If you just look at the numbers, straight at the numbers, on the broadcast side in sports, anywhere — and especially when you look at football or anywhere — between 6 percent to 8 percent of their revenue is automotive and then you take out the financial picture there and now maybe you’re up to 9 percent or 10 percent,” MPG North America Chief Operating Officer Steve Lanzano told the Reuters Media Summit. “That’s a ton of money that’s moving out of the marketplace. That is very scary.”

NFL Executive Vice president Eric Grubman acknowledged that the economy is hurting the league on several fronts: it makes financing tougher; it crimps advertising revenue for its partners; and it undercuts consumer spending on everything from tickets to jerseys.

But, says Grubman, it’s not all gloom and doom.

“There is a part of the National Football League that is I believe very countercyclical and very recession resistant. And that is that when people are experiencing tough times… economic or otherwise… they go back to things that they love and they go back to things that they enjoy. And sports is one of them,” he said.

Hmmmm.

NASCAR and Major League Baseball drop into the Reuters Media Summit later today.

Keep an eye on:

• National Amusements Inc’s negotiations to restructure its debt are moving slowly — that means a deal may not happen this year (WSJ.com)
• Blockbuster will sell tickets for top U.S. concert producer Live Nation (Reuters)
• Publicis Groupe is building its Asian assets with a deal to buy W&K Communications, a full-service agency in China (Adweek)

(Photo: Reuters)

The Redstone family knows drama. Late last week, Sumner Redstone’s family holding, National Amusements, announced that it was making a substantial stock sale in each of its key holdings, CBS and Viacom to comply with debt covenants. 

But the sale raised questions about whether some of the proceeds from the sales were actually earmarked to fund and expansion of National Amusements movie theater business, as reported by the Wall Street Journal.

Sumner Redstone’s daughter, Shari, who runs National Amusements, issued a statement to the Wall Street Journal denying that the stock sale had anything to do with expanding the theater business.

“The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate,” Ms. Redstone’s movie theater unit said in an emailed statement Tuesday. “National Amusement’s recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock.”

Sumner Redstone has not publicly weighed in on the reason for the stock sale, and people familiar with the situation told the Wall Street Journal that he was caught off guard by the events. 

The sale — and the reason behind it — fueled more speculation about tension between Sumner and his daughter. For some time, the two have been at odds over a number of issues, including the direction of the movie theater business and her own professional goals.

Is more family drama ahead? Stay tuned.

Keep an eye on:

• EBay plans a major expansion of its fast-growing U.S. web classifieds unit, but experts doubt it can overtake well-loved rival Craigslist and build a viable business as its online auctions slow (Reuters)
• Financial Times-owner Pearson Plc said its adjusted 2008 earnings per share should be toward the top end of current market estimates if the dollar maintains gains versus sterling (Reuters)
• Colin Callender will leave his job as president of HBO Films by the end of the year to start his own entertainment production company (NY Times)

(Photo: Reuters)