Sumner Redstone is selling low — way low. Here’s The Wall Street Journal with the news:

In an effort to help resolve his debt problems, Sumner Redstone has sold his controlling stake in videogame company Midway Games Inc to a private investor.

Mr. Redstone’s holding company, National Amusements Inc., is expected to announce Monday that it sold its 87% stake in Midway to investor Mark Thomas, a move that represents a significant loss on the media mogul’s investment but secures a hefty tax benefit as he negotiates other asset sales.

Redstone has been discussing selling all sorts of assets, including movie theaters and his holding in slot machine company WMS Industries, the Journal said.

What next? Redstone already said he wouldn’t sell any more shares in Viacom and CBS to cover his debts. But the Journal says the Redstone family is discussing securing their outstanding debt ($1.6 billion) with their remaining assets. Let’s watch those stocks…

Keep an eye on

• It’s Reuters Media Summit week in New York City, when we get a bunch of executives in a room and get them to tell us about how they’re negotiating the downturn. There will even be TV. (Reuters)
• Call it dumb luck. We knew USA Today was going to cut 20 jobs in its newsroom, but one of our reporters on holiday shopping coverage found a business-side person at Gannett’s and the nation’s biggest paper who said there are going to be cuts on her side too. A Gannett spokeswoman confirmed that this will happen, but a spokeswoman for the paper wasn’t available to tell us how many will go.
• Nearly everyone has written about Michael Wolff’s new Rupert Murdoch book. Here’s a quick link rundown. Janet Maslin’s review in The New York Times is quite interesting. For the others, there’s us, Bloomberg, the Financial Times, MarketWatch, The Independent and The Age.

This is shaping up as a bad day for Sumner Redstone — and he’s had a few of those lately — at least where his investments are concerned. Check out share prices of his three major holdings: CBS down 17 percent and Viacom down 11 percent. Midway Games takes first (or last) prize: down 34 percent.

All this wreckage puts more pressure on National Amusements, Redstone’s privately held company and investment vehicle. Recall, last month National Amusements ran into trouble with its banks when it could no longer maintain certain debt-to-asset ratios because the value of its investments in CBS and Viacom had fallen so sharply.

These days, National Amusements is trying to work out new agreements with its banks, and many analysts believe it will have to sell some assets to pay down debt coming due in December. Pali Research’s Rich Greenfield is one of them.

In a note today, he recommended just selling Viacom, since it’s the asset that could be most easily sold. But Greenfield acknowledges that Redstone is unlikely to take that course. Instead, he writes that Redstone will probably look at selling Midway shares in the open market, and putting National Amusement’s theater chain up for sale.

But Redstone may have to make yet another move — one he badly wants to avoid.

Here’s how Greenfield summed it up: “While Mr. Redstone has stated multiple times that he has ‘no intention’ of selling more CBS and/or Viacom shares and that NAI is having constructive talks with its lenders, we believe he may no longer have a choice.  Assuming the theater chain can be sold, and CBS cuts its dividend (which generates quarterly income for NAI of $19 mm), NAI would have no way of servicing its debt beyond selling CBS and/or Viacom shares.”

(Photo: Reuters)

Chalk one up for Microsoft — sort of.

If today’s report in the Wall Street Journal is right, then Microsoft is about to land an agreement with Verizon Wireless to become the default search provider on its cellphones.

In its battle with Google, that should count as a win for Microsoft, even if the company had to offer much, much better terms than its rival.

From the article: “Verizon is tilting toward Microsoft because the software giant is offering significantly better financial incentives, but the telecom company is still in discussions with Google and the situation is fluid with both companies, these people said.”

The WSJ says the deal would likely call for Microsoft to share revenue with Verizon when advertisements come up in response to a search. It reports that there would likely be guarenteed payments to Verizon of $550 million to $650 million over five years. That’s about twice what Google offered, according to the report.

If accurate, Microsoft’s super aggressive offer shows just how worried it is about Google. It needs wins, particularly when it comes to search deals.  But as Silicon Alley Insider points out, Google is under some pressure, too.

“Google is now probably getting quietly desperate, too (stock price $300), so it will be interesting to see if it panics and does something economically stupid. Probably not, but possible, given how much Google is betting on the growth of mobile.”

And so the battle rages on…

Keep an eye on:

• Dentsu, Japan’s largest advertising company, cut its annual profit outlook by 20 percent and said it would buy a U.S. ad agency as it seeks growth outside the stagnant and mature domestic market (Reuters)
• Conde Nast’s online media division laid off more than three dozen staffers from ad sales to infrastructure (AdAge.com)
• Shares in struggling Midway Games Inc. - media mogul Sumner Redstone’s pricey gamble on the video game business - sank to a fresh all-time low (NY Post) 

(Photo: Reuters)

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)

No doubt about it, the financial crisis has been tough on the media business. Just ask Sumner Redstone, the folks over at the Associated Press, or anyone on Madison Avenue.

Then there are some of the poorly rated television shows to consider… The Hollywood Reporter writes that thanks to the economic downturn, the broadcast networks could play it safe and order full-seasons of some low-rated programs rather than replace them with new series.

There are a number of reasons for this, one of which is that it costs money to order and market a new series.

But, the article points out, the “most obvious reasons for the pickups are that many series this fall are doing poorly, and these shows are performing among the best of the worst. Networks are loath to exit the fall without at least one series to tout as a success. Plus, the writers strike, as Rash noted, has delayed quality mid-season replacements. And with ratings declining overall because of increasing DVR penetration and audience erosion to cable networks and the Internet, the bar for success keeps being lowered.”

So even if your retirement savings isn’t what it used to be, at least you’ll be able to enjoy “Knight Rider” for a while longer.

Keep an eye on:

• Chinese media firm Sohu.com Inc’s third-quarter profit more than quadrupled, helped by higher revenue, and forecast fourth-quarter results above analysts’ estimates (Reuters)
• Sony Corp Chief Executive Howard Stringer said the electronics maker needs to cut fixed costs to weather a downturn in demand and a surge in the yen that forced it to slash its profit forecasts last week (Reuters)
• The Star-Ledger, New Jersey’s largest newspaper, will cut its newsroom staff about 40 percent by year’s end, one of the largest reductions in a single move by a major American paper (NY Times)

(Photo: Reuters)

Step off — CBS and Viacom are not for sale!

That comes courtesy of Sumner Redstone, who should know since he holds a controlling stake in both of the media companies. Here’s what he told the Wall Street Journal in an interview:

Asked whether he would consider selling one of the companies, Mr. Redstone said: “Not a chance. I will not sell Viacom and I will not sell CBS. They’re two great companies.” He added: “We have no intention to sell any more stock and I’m decisive about that.”

Redstone’s interview with the Journal should help clear the air on much recent speculation about the future of Viacom and CBS — both suffering badly in the stock market. In the last month, shares of Viacom have dropped about 30 percent, while CBS shares have fallen a staggering 45 percent.

Stock slide aside, the chatter about a possible sale really began when Redstone had to sell a bunch of non-voting stock earlier this month to help pay off debt at his privately held National Amusements. Now he’s trying to rework some of the convenants related to that debt.

About talks with lenders he says: 

“I have every reason to have some confidence” that we will be able to reach a deal with the banks, Mr. Redstone said. “I have no guarantee though…of course, anything is possible: The world might end tomorrow.”

Ummm, let’s hope not.  

Keep an eye on:

• Ticketmaster agreed to acquire what is widely regarded as the music world’s most powerful artist-management company and install the management company’s boss at the helm of the combined (WSJ.com)
• Rupert Murdoch has raised objections with Michael Wolff and his publisher about portions of a new book, “The Man Who Owns the News: Inside the Secret World of Rupert Murdoch” (NYTimes.com)
• A rift is developing between Martha Stewart and Wenda Harris Millard, the new co-chief executive of her company (NY Post)

(Photo: Reuters)

Another day, another twist in the latest Sumner Redstone drama. This time, the media mogul’s company, National Amusements, announced that it’s having sit-downs with its lenders over some debt covenants? What are the covenants? And how much debt to they cover? Nobody outside of the company seems quite sure at this point.

What we do know, is that all of this has been caused by the sharp drop in CBS and Viacom shares — since they are worth far less as assets than they were a a month ago, we assume that some debt-to-assets ratio has become a problem.

What does this mean for Viacom and CBS? Not much, in the short term. Stock of both were steady to slightly higher in early trade. But it does underscore what’s at stake for Redstone, and probably turns up the heat on the companies to perform better and get the stock price moving higher.

Keep an eye on: 

• Google Inc profits surpassed Wall Street quarterly forecasts, as the Internet search and advertising leader held deepening economic gloom at bay (Reuters)
• NBC Universal’s Spanish-language television operation has cut 85 jobs, reducing its workforce 5 percent (LA Times)
• The final U.S. presidential debate was watched by about 11 percent fewer Americans than watched the “town hall” format the week before (AdAge) 
• CBS College Sports said Thursday that it was laying off nearly one-quarter of its staff, or about 30 employees (NY Times)
• Tribune Company has given a two-year notice to the Associated Press that its daily newspapers plan to drop the news service, becoming the first major newspaper chain to do so since the recent controversy over new rates began (Editor & Publisher)

(Photo: Reuters)

We’re once again wondering who will blink first in Hollywood.

The Screen Actors Guild and the major firm and television studios are having another pow-wow today, and the subject is an ominous sounding “final offer” that management has presented to the union.

As we have seen, the talks so far haven’t gotten around the same sticky issues that prompted a strike this winter by the Writers Guild of America strike. So a take-it-or-leave-it offer by the studios doesn’t sound too promising if the entertainment biz is to avoid another strike.

But wait! SAG executive director and chief negotiator, Doug Allen, suggested on the eve of his union’s formal response that the door to further deal-making remained open. He had this to say in an interview with Reuters:

“I don’t know that those categorical statements are always to be taken at face value,” he told Reuters. “In fact, somebody from the WGA told me they got a total of 10 final offers from the AMPTP (during their talks). So we’ll see.”

Meanwhile, the Wall Street Journal reports that the studios may be looking at a slight change in strategy. It reports:

“The studios, fearing SAG leadership might drag negotiations on through the union’s elections in September, are considering adopting a more aggressive strategy. The producers have discussed the possibility of publicly asking SAG leadership to allow its members to vote on the current deal or declaring an impasse in the talks, which would allow them to implement parts of the current offer.”

Keep an eye on:

• In a CNBC television interview, Sumner Redstone says his daughter is no longer the company’s heir apparent and that she will leave the Viacom board as part of an agreement he had reached with her (NY Times)
• Financial news and data company Bloomberg LP is creating several new units as part of a reorganization that includes a shuffling of top management (Reuters)
• Interpublic Group, the advertising services company, named Matt Seiler as global chief executive of its Universal McCann media buying agency as part of a broader shake-up (Reuters)
• Yahoo will let customers, academics and even rivals build customized Web search services on top of its own technology, introducing a resale model into a major Internet market where it ranks a distant No. 2 to Google (Reuters)

(Photo: Reuters)

Youtube video we wish existed: Sumner Redstone rocking out on “Rock Band” to the Beastie Boys’ “Sabotage” or Bon Jovi’s “Wanted Dead or Alive.”

In the meantime we can assume that Viacom’s octogenarian executive chairman is rockin’ today after the media conglomerate said its first quarter profit rose 33 percent on strong sales of the “Rock Band” video game and higher advertising revenue at MTV Networks. Revenue rose 15 percent to $3.1 billion, beating analysts’ estimate of $3 billion.

It gets even better in the Viacom executive suite, at least for today — its film “Iron Man” kicks off the summer blockbuster season to positive reviews, including that of tough Wall Street Journal reviewer Joe Morgenstern who said it had “exhilarating” action and “scintillating” comedy.

Industry gurus suggest the opening box-office take could top $100 million. Ka-ching! (It cost $135 milion to make.)

The good news does not negate lingering issues at Viacom, namely the resiliency of its cable networks in an advertising environment that is challenging at best. Also, everyone wants to know more about the new premium cable/VOD enterprise being built by Viacom, MGM and Lionsgate.

Or, what about the risk of collapsing the distribution window so that Apple’s iTunes sells movies on a DVD’s release date?

I just want to know: would Redstone rather jam to David Bowie or Blue Oyster Cult?

(Reuters)

Keep an eye on:

• Microsoft’s Steve Ballmer says the company poised to detail its next moves on Yahoo (Reuters)
• A night after Tuesday’s much-discussed on-air blunder by “American Idol” judge Paula Abdul, the results show of the talent show lost 1.2 million viewers from the previous week. (Hollywood Reporter)
• Is Microsoft working on a Blu-ray player for the Xbox 360? (Engadget)

(Photos: Sumner Redstone and wife Paula Fortunato, Reuters; www.rockband.com)