Viacom mulling Midway takeover

Struggling publisher could get MTV, Nickelodeon licenses as Sumner Redstone indicates a sale to Viacom is a possibility.

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Midway could soon be the publisher of valuable licenses from Nickelodeon and MTV, as Viacom CEO Sumner Redstone tightened his grip on the struggling publisher today. Redstone told regulators that Viacom is considering expanding into the video game business and might acquire Midway. The statement was contained in a filing the investor made with the Securities and Exchange Commission this morning.

In the documents, Redstone revealed that "The management of Viacom Inc. has from time to time considered the possibility of participating more extensively in the electronic games business, possibly by acquiring a company in that industry. In this regard, Midway could be considered as a potential licensee of Viacom intellectual property, or as an acquisition candidate."

Regardless of whether Viacom buys Midway, the filing clears the way with regulators for Midway to compete for Viacom licenses. Analyst reaction was swift. "We believe that Midway is unlikely to be acquired by Viacom, but we think that the company should be considered a candidate [for Viacom licensing deals] given Mr. Redstone's large holdings," Michael Pachter, senior vice president of research at Wedbush Morgan Securities, said in a morning memo to investors.

The news is a blow to rival publisher THQ, Pachter noted, which has been a Viacom licensee in the past.

Redstone, who holds 73.6 percent of Midway's stock--down from a reported 80 percent last month--said in early June that he was considering taking the Mortal Kombat-maker private. That same month, Redstone appointed his daughter, Shari, as vice chairman of Midway’s board and former VU Games chairman Kenneth Cron as CEO.

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