Redstone Eyes Midway Stocks

Viacom chairman Sumner Redstone may be interested in securing a controlling interest in Midway, perhaps in an attempt to thwart third-party efforts to acquire the publisher. Redstone currently owns a 25 percent share of the company, which he acquired when WMS Industries - of which he owns 26 percent - distributed its 87 percent interest in Midway to shareholders in 1997. Midway shares are currently holding at US$9, down significantly from its full-year high of $24. Followers of the company suspect that Redstone recently purchased an additional 1.2 million shares of the company and expects to buy more in the near future. "It looks as if [Redstone is] pulling a creeping takeover," an unnamed source told Business Week magazine recently. Unfortunately, Redstone was unavailable for comment, and a Viacom representative told GameSpot that he does not comment on his personal investments.

Additionally, companies such as Microsoft and Sega have been named as potential suitors of Midway. When contacted for comment, a Microsoft representative told GameSpot that there are numerous rumors regarding Microsoft's expansion interests and that there is no pertinent information available on this latest rumor. Sega of America was not available for comment.

Like many other companies in the video game industry Midway is in the midst of a financial slump as the industry transitions to next-generation consoles - the company expects to lose 52 cents a share in the fiscal 2001. However, it has fifteen games in development for the Sony PlayStation 2 and will continue its support of the Sega Dreamcast. The company also expects to strongly support the Microsoft Xbox and Nintendo GameCube platforms. With recognizable franchises such as Ready 2 Rumble, NBA Showtime, NFL Blitz, and Mortal Kombat the company is expected to recover and report strong earnings by 2002, which also makes it a viable target for acquisition at its current stock price.