Redstone Could Sell Theater Chain To Keep Wolf From Door

26 November 2008

NEW YORK: Sumner M Redstone, the octogenarian chairman and controlling shareholder of CBS and Viacom, is said to be considering the sale of the 1,500 strong movie theater chain owned by his family holding company, National Amusements, in an effort to offset its debts of $1.6 billion (€1.2bn; £1.1bn).

Estimates value the theater chain at between $500 million and $1bn, with Redstone's own valuation, unsurprisingly, thought to be at the higher end of that spectrum.

Some $800m of National Amuestments' debt falls due on December 19, and Redstone has announced that its talks with banks are progressing well.

He also estimates that the total value of the holding company's assets "well exceeds its debt". 

CBS's share price has fallen by 78% this year, with Viacom's value also plunging by 67.5%, meaning the value of National Amusements' stock in the two companies totalled around $1.4bn earlier this week.

Michael Nathanson, an analyst at asset managers Sanford C. Bernstein & Company, opines: "There is definitely a Redstone discount on these assets.

"Investors will say, 'I don't want to be involved with any of these because we don't know what Sumner will do.'"

Redstone was forced to sell $233m of his holdings in CBS and Viacom earlier this year to stop National Amusements defaulting on its loan agreements.

Data sourced from New York Times; additional content by WARC staff