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Redstone dumps Midway for $100K

Media mogul sells $30 million, 87% interest in beleaguered publisher for pittance in exchange for debt assumption; loss estimated at $800 million.

Sumner Redstone's grand experiment with the game industry has come to an ignominious end. The Wall Street Journal is reporting that the 85-year-old media mogul, best known for his control of Paramount Pictures parent Viacom and GameSpot parent CBS, has sold off his controlling stake in Midway Games. Redstone held an 87 percent ownership of the Mortal Kombat vs. DC Universe publisher through his holding company, National Amusements.

The sale was not unexpected, as Redstone has been frantically divesting himself of assets over the past few weeks to help restructure National Amusements' debt. The price, however, was a shock. Redstone's organization will sell its 92.1 million shares of Midway, which has a market value of $30 million, for just $100,000 to private financier Mark Thomas. The price works out to just $0.0012 a share, far below the $0.33-per-share price the publisher was trading at on the New York Stock Exchange as of press time.

Why the Matterhorn-steep discount? As part of the deal, Thomas will assume $70 million of National Amusements' whopping $1.6 billion of debt. Redstone's company will also take an $800 million loss on the deal, allowing it to write off the sum in tax filings for both current and past years.

Redstone's ditching of Midway marks the end of an experiment that began eight years ago, when it was first reported he was interested in taking over the once-mighty publisher. For the next four years, he steadily scooped up shares in the Chicago-based company, eventually upping his ownership stake to over 80 percent and placing his daughter Shari on Midway's board. (The younger Redstone has since resigned.)

That same summer, Midway snatched Epic's Unreal Tournament license away from longtime publisher Atari, which was floundering financially. Now, after seeing disappointing returns from development-intensive projects such as BlackSite: Area 51, Midway has befallen a similar fate. After years of dismal earnings reports--including a $76 million quarterly loss posted last month--the Blitz: The League II maker was recently tackled with a delisting notice by the NYSE.

122 Comments

  • slingshot_ylo

    Posted Feb 18, 2009 9:01 am GMT

    This is why Hollywood and Wall Street boy geniuses need to stay the hell out of gaming.

  • Thaliard

    Posted Feb 18, 2009 8:46 am GMT

    Wasn't "Sumner" the name of the sorcerer in Midway's own Gauntlet Legends?

  • bluemagic221

    Posted Feb 13, 2009 6:41 am GMT

    Shouldn't the government bail them out? I was under the impression if your business is going sour that the government bails you out. Isn't that Obama's big thing? Oh, wait...ori s that just for companies associated with lobbyists and politician's pet projects? USA is crapping out.

  • downloadthefile

    Posted Feb 12, 2009 2:09 pm GMT

    im not saying its a good thing that this happened, but at times businesses that arent producing good quality products deserve to go out. look at the list of their games by release date...all of the most recent games they have terrible reviews and aren't good.

  • Scuzzmuggler

    Posted Jan 19, 2009 12:29 am GMT

    @BikerPunk who said "this is terrible, but a nice shock to the industry, as it shows if they want to come thru this time of financial issues, they have to produce excellent games. mediocore ones just arent gonna hold up right now. "

    While these kind of things might hopefully inspire a bit more quality control in games, it's could also discourage experimentation. Good games don't always sell, and mediocre games don't always get neglected. As the economy and industry get tighter, we might see less games trying something new in favour of the tried and true seller. Goodbye Mirror's Edge and Alone in the Dark, hello Halo 216.

  • BikerPunk

    Posted Dec 31, 2008 10:54 am GMT

    ummmmm...this is terrible, but a nice shock to the industry, as it shows if they want to come thru this time of finacial issues, they have to produce excellent games. mediocore ones just arent gonna hold up right now. when money was easy to come by, we bought any game, but now....times are tough for many, and not everyone can do that any more.

    Midway is a big name tho, and it would be a shame to see them flop. i hope they pull through.

  • RoC1909

    Posted Dec 10, 2008 9:31 am GMT

    Wow! What a deal......NOT!!! Let's see. The stock was valued at 30 million. OK! This guy 'Mark' paid 100,000 dollars for it. OK. Not bad at all. But 'good ol' Mark, now has incurred a 70 million dollar debt. Let's see..... 70 million minus 29 million 9 hundred thousand equals......uh, WITHOUT THE LUBE!!! What kind of 'cave man' math is this Mark Thomas using to figure that this was a deal??? And we wonder WHY The United States are in such bad shape financially!! Perfect example!!

  • SauhlGood

    Posted Dec 2, 2008 11:29 pm GMT

    Well lets all hope that the great sucess of Mortal Kombat vs. DC Universe helps Midway a bit. Its a Great game, certainly worth playing, and its selling like cake at a fat kid convention. And if they want to make a part 2 with more characters they already have my money!

  • MasterCS

    Posted Dec 2, 2008 10:15 pm GMT

    This won't effect EPIC at all, EPIC is one of the most richest companies out there because they own and sell the UNREAL engine to a lot of game developers to use.

  • andrew_ribbons

    Posted Dec 2, 2008 4:21 pm GMT

    I feel sorry for this company, but only because of it's involvement in UT3. I don't want to see Epic's choice publisher go under, damaging Epic in the process. Hopefully Epic will see some sense soon, and jump ship to a more successful and stable publisher, like Microsoft Game Studios.

  • Pete5506

    Posted Dec 2, 2008 1:14 pm GMT

    Well this is just the start of something bad

  • Sacred-Snow

    Posted Dec 2, 2008 11:23 am GMT

    I like Midway, well some of Midway. The new Mortal Kombat looks like it could be fun. Unreal Tournament 3 is fun. This is Vegas, which has been perenially pushed back, looks awesome! I have high hopes for that game, especially seeing it pushed back months on end.

  • CrushedGroove

    Posted Dec 2, 2008 11:04 am GMT

    @rr2Real

    Why in god's name would Nintendo be next? They're actually MAKING money.

  • CptSir

    Posted Dec 2, 2008 10:43 am GMT

    EA > Midway?

    Aye sir, I believe so.

  • JamesSoprano

    Posted Dec 2, 2008 10:22 am GMT

    haha Phil Harrison couldn't even Save Midway if he went to them to help out. ( not saying their is a reason why he should i'm just atiing ) Midway is in Hot Water

  • necronaux

    Posted Dec 2, 2008 10:21 am GMT

    $0.0012 ?? It's about the value of the US dollar, currently.

  • Homerj

    Posted Dec 2, 2008 10:19 am GMT

    Midway put all its eggs in one basket with Epic...and they sold them up the river with a UT game that was little more than a tech demo for the PS3 native UE3. If Epic is allowed to keep dumping PS3 bargain-bin games like UT3 on the 360 community, maybe Epic can do for Microsoft what it did for Midway and make a lot of fanboys happy.

  • generaltom

    Posted Dec 2, 2008 10:15 am GMT

    Hahaa... he placed his daughter in charge of the company? That's hilarious.

  • blackace

    Posted Dec 2, 2008 9:36 am GMT

    The end is near for Midway. Most of their games are crap. One of my friends use to doing game testing for them and said it was horrible. Playing terrible games all day sucks. The Blitz series is Midways only decent title and that's not saying much. Psi-Ops was good too, but it didn't sell well. I can't remember the last time Midway had a 1 million seller.

  • basskill2000

    Posted Dec 2, 2008 9:19 am GMT

    oh no good... I am not happy about this. This may be the end of midway, lets all hope the "new Guy" does some good things to save the company. I will be watching for further develpoments on this saga. Midway was always one of my fav developers

  • otanikun

    Posted Dec 2, 2008 9:11 am GMT

    They'll recover, I mean MK vs. DCU can't be the last game they release, it just looks bad at the moment

  • teamfear

    Posted Dec 2, 2008 8:05 am GMT

    Midway is just like Atari. They spend billions to make games and then release them in a unfinished horrible state and then they wonder why they don't sell. It's just poor management raking in millions of dollars annually that could care less if a game sells or not as long as they get paid a million a year. I have Atari stocks and i see what these clowns make and they don't deserve a penny of it. Alone in the dark anyone?

  • teamfear

    Posted Dec 2, 2008 8:05 am GMT

    Midway is just like Atari. They spend billions to make games and then release them in a unfinished horrible state and then they wonder why they don't sell. It's just poor management raking in millions of dollars annually that could care less if a game sells or not as long as they get paid a million a year. I have Atari stocks and i see what these clowns make and they don't deserve a penny of it. Alone in the dark anyone?

  • rikhan_z

    Posted Dec 2, 2008 7:47 am GMT

    Midway still has their Unreal Engine 3 from Epic and I think that's strongly going for them, they also offer free games on fileplanet.. such as Psi-Ops and Area 51, with ad support... they have alot going for them, this is brizzare that Midway is getting sold of that much. Still Midway has a market value of $30 million and hopefully they will have better management specs.

    Who's Redstone?

  • Amir29

    Posted Dec 2, 2008 7:46 am GMT

    ... And the Midway story now becomes a saga.

  • gzader

    Posted Dec 2, 2008 7:43 am GMT

    Pretty good deal. Midway is dead, to get so much out of it shows promise.

  • Autolycus

    Posted Dec 2, 2008 7:14 am GMT

    management is always the problem. Until management starts to get their hands dirty and get into the heart of what all these employees do to make a game, nothign will change. That goes for every company. If you think management should be the "sit back and supervise" you are part of the problem, NOT the solution. Companies TRICKLE UP NOT DOWN.

  • Autolycus

    Posted Dec 2, 2008 7:13 am GMT

    DUH DUH DUH DUH

  • kemar7856

    Posted Dec 2, 2008 7:11 am GMT

    $0.0012 a share LOL midway must be dead

  • jmartin1016

    Posted Dec 2, 2008 7:06 am GMT

    Midway needs to cut some serious fat in order to stay afloat. Blacksite is not of high enough quality to stand in the FPS market. They might be better off making games for the Wii. Low production costs would benefit them, then they could make games of their old IP's that appeal to hardcore gamers. Then again I don't know what I talking about.

  • jknight5422

    Posted Dec 2, 2008 6:17 am GMT

    "The sale was not unexpected"

    wtf is with the double negatives?

  • sieg6529

    Posted Dec 2, 2008 6:09 am GMT

    I'm glad I decided not to buy their stocks.

  • JACKAL1883

    Posted Dec 2, 2008 5:18 am GMT

    It is a classic video game company that is in need of new management. I really hope they realize the potential they have to make great games. Midway could use some hardcore gamers on staff that's more in tune with the industry. It would be really sad to see this company die.

  • shadowblade99

    Posted Dec 2, 2008 5:02 am GMT

    Let's hope that Midway pulls out of this slump. I hope to be playing new Mortal Kombat games until I am 90.

  • Trooperdx3117

    Posted Dec 2, 2008 4:35 am GMT

    I'll always remember Midway for one of my favourite games on the old Xbox: Psi ops. Now that was an awesome game that actually implemented physic powers well into the game and had satisfying combat its just a shame no one bought it

  • combatsoldier

    Posted Dec 2, 2008 3:41 am GMT

    oh no this is really bad news. I have been playing midway games since they were first developed. They have made dozens of my favorite games and they have amazing potential. I hope someone saves there company before its to late. Man I never saw this coming. Feel like ive just been hit on the head. Midway has made everything from recent next gen games all the way back to the days when I was a kid and arcades ruled the gaming industry. I hope Midway comes back and succeeds.

  • Unabomber256

    Posted Dec 2, 2008 2:49 am GMT

    @Alphamale001

    I agree, I hope who ever this Mark Thomas is he can turn the company around and not just close it and sell off the IPs.

  • Lucidmike78

    Posted Dec 2, 2008 1:19 am GMT

    Why pay taxes when you can take a shot at high risk ventures like Midway? If you succeed, you just end up richer, if you totally bomb, it would have gone to the IRS anyway. We can all learn from this guy.

  • rr2Real posted Dec 1, 2008 11:36 pm GMT (does not meet display criteria. sign in to show)

    rr2Real

    Posted Dec 1, 2008 11:36 pm GMT (hide)

    i hope nintendo is next or goes 3rd party!

  • JunoFallon

    Posted Dec 1, 2008 11:21 pm GMT

    GodsPoison you can't possibly be more than somewhere in your teens in age to make a statement. Midway was one of the godfathers of the Arcade as well as the originator of several popular IP's. Even if YOU didn't like them. Childish.

  • GodsPoison posted Dec 1, 2008 11:15 pm GMT (does not meet display criteria. sign in to show)

    GodsPoison

    Posted Dec 1, 2008 11:15 pm GMT (hide)

    so....uh what does this have to do with gaming? I cant even recall any midway games that ive ever played, let alone any good ones.....

  • Alphamale001

    Posted Dec 1, 2008 10:57 pm GMT

    I can honestly say I don't care for the recent Midway offerings. But that said, I would hate to see them go. I know this article isn't about Midway fading away, but it seems like it could be in the near future. Midway is a staple of the gaming industry. It is just a harsh reality of the state of the economy. I really hope Midway doesn't go under and makes a come back with some awesome games.

  • Elann2008

    Posted Dec 1, 2008 10:47 pm GMT

    They need to get their heads together and make a quality, epic game. Not milk the MK series to death. Are they living in the 90's still, where everyone plays MK2? Midway has been crap-tacular for a decade now. Time to mature and grow up. Once they put MK series aside and work on new projects, maybe they'll have my respect and interest.

  • Proman84

    Posted Dec 1, 2008 10:17 pm GMT

    Wow. Redstone really rules with deciseveness of a true mogul.

    "A) Redstone is in huge debt personally due to the stock market crash"

    A - this is simply not true. For whatever loses he suffered, Sumner still has billions more.

  • Henninger

    Posted Dec 1, 2008 10:14 pm GMT

    If Midway even has a slight chance its with MK vs. DCU. Whether or not it is a good game doesnt matter. The name will sell. Wut they should've done wuz wut Capcom is doing with Street Fighter, 2D fighting with 3D graphics. I hate 2 c Midway go out like this. Midway has its moments in the gaming world though & no1 can take that away from em.

  • fmprodguy

    Posted Dec 1, 2008 10:12 pm GMT

    Couple of things so ya'll understand the between the lines.... A) Redstone is in huge debt personally due to the stock market crash
    B) Even if Midway was making mad cash, Redstone has to sell things in creative ways to get out of debt
    C) A personal holding company, is one of the places rich hide their money, then they got "toes up" (dead) rich people are not really rich anymore.
    D) Redstone selling Midway, any other companies, or parts of companies... even at crazy deals... does not mean those companies are dead.
    E) Selling to a private financier also does not mean Midway is dead, or dying if they think they can run it better and turn it around... but it does mean if they can and want to turn a quick buck they can sell any and all IP for a profit... What Mark Thomas will do time will tell.

  • newb16

    Posted Dec 1, 2008 10:05 pm GMT

    Well I wont be buy games made by midway anymore. Turn 10 Studios here I come!!! Forza 3 h*ll yeah!!!

  • man_alive

    Posted Dec 1, 2008 9:16 pm GMT

    @zintarr: it's not tax evasion, it's an actual $800 million loss. dude paid $800 million for his shares and then sold them for $100K. as a general investing strategy, i wouldn't advise it.

  • zintarr

    Posted Dec 1, 2008 8:35 pm GMT

    Tax evasive shananigins are evil!

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