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Midway Games Backer Sees Credit Crunch, Possible Ramifications
by Chris Remo
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October 21, 2008
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A credit crunch surrounding media mogul Sumner Redstone may cause considerable problems for publisher Midway Games (This Is Vegas), in which Redstone owns over 85 percent of stock through his companies National Amusements and Sumco.
Last week, National Amusements, which is privately owned by Redstone, sold $233 million worth of shares of its stock in CBS and Viacom at only 60 percent of the value it was targeting.
It was then revealed that National Amusements is attempting to refinance $1.6 billion in debt -- currently, the company is facing a December deadline to repay $800 million of that sum, leading some to connect the stock sale and the impending loan issue.
Much of the blame for the company's troubles has been placed at the feet of Shari Redstone, Sumner Redstone's daughter, who serves as president of National Amusements (as well as chairwoman of Midway's board of directors) and whose movie theater chain expansion is said to have been extremely costly.
But, according a Los Angeles Times report and another game-specific story by Variety, this may not tell the whole story, and there may be knock-on effects to Midway in the longer-term.
The publications report that significant cash infusions from National Amusements have been needed to keep perpetually-ailing Midway in business, with amounts estimated to be up to $130 million. Midway recently disclosed a $40 million loan from NAI in order to manufacture and ship their holiday titles.
Furthermore, family conflict may be exacerbating the problem -- a loan was taken for a $240 million settlement payout to Sumner Redstone's son Brent.
Meanwhile, Shari Redstone and her father have notoriously long been said to be in continued disagreement about Midway's direction. Since 2005, Shari Redstone has controlled National Amusements' investment in the publisher.
Midway's shares have plummeted since climbing to $23.25 at the end of 2005, and have traded under $3.00 for nearly all of 2008; the stock closed today at $1.03. Gamasutra will update as more information about possible effects on Midway's financing come to light.
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Into the public eye it falls, this is still only the beginning.