Redstone tries to quell Viacom and CBS investor fears
Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.
Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.
Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.
"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."
The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.
However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.
Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.
Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.
Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.
-- Claudia Eller