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.