Redstone dumps Midway for $100K

By Tor Thorsen, GameSpotPosted Dec 1, 2008 12:42 pm PT

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.

126 Comments

  • slingshot_ylo

    Posted Feb 18, 2009 9:01 am PT

    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 PT

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

  • bluemagic221

    Posted Feb 13, 2009 6:41 am PT

    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 PT

    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 PT

    @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 PT

    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 PT

    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 PT

    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 PT

    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 PT

    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 PT

    Well this is just the start of something bad

  • Sacred-Snow

    Posted Dec 2, 2008 11:23 am PT

    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 PT

    @rr2Real

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

  • CptSir

    Posted Dec 2, 2008 10:43 am PT

    EA > Midway?

    Aye sir, I believe so.

  • JamesSoprano

    Posted Dec 2, 2008 10:22 am PT

    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 PT

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

  • Homerj

    Posted Dec 2, 2008 10:19 am PT

    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 PT

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

  • blackace

    Posted Dec 2, 2008 9:36 am PT

    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 PT

    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

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