Shari Redstone's Rising Star Media sold to Russian theater chain

Shari Redstone and her partners have sold the Russian theater circuit Rising Star Media to Cinema Park, Russia's largest cinema chain.

Redstone, daughter of media mogul and Viacom Inc. and CBS Corp. Chairman Sumner Redstone, announced Monday that she and her partners, Paul Heth and investment banker Charlie Ryan of UFG Private Equity of Russia, sold the 75-screen theater chain last week to Cinema Park.  Financial terms were not disclosed. But people close to the deal said the business was sold for $200 million, making it an appealing offer at a time when emerging markets like Russia have grown increasingly profitable to the major Hollywood studios.

 Redstone launched Rising Star Media in 2002 in partnership with Boston-area-based theater company National Amusements, of which she is president, and in 2009 acquired 100% ownership of the company with Heth and Ryan.

"I fell in love with the country within hours of my first visit to Moscow,'' Redstone said in a statement. "I was deeply impressed with the energy and vibrancy of the Russian people and their love of entertainment -- particularly with their fascination with movies. I knew immediately that Russia was a place that we needed to be and I am very proud of what we were able to accomplish there in such a short period of time."

Rising Star Media, which operates luxury multiplex venues under the name Kinostar de Lux, has 75 screens between Moscow and St. Petersburg and says it owns the top five grossing cinemas in Russia.

Cinema Park is a dominant player in the Russian exhibition industry. Founded in 2002 by Prof Media, one of Russia's largest media and entertainment holding companies, Cinema Park in 2010 served 12 million patrons and generated revenues of $120 million.

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-- Richard Verrier

Photo: Rising Star Chairman Shari Redstone and CEO Paul Heth at the opening of one of their Moscow Kinostar de Lux Cinemas. Credit: Nickolay Chechet / PRNewsFoto / Rising Star Media

Kids have easy access to explicit music but have a harder time getting violent video games

For a kid, scoring a music CD with explicit lyrics is easy. But good luck when it comes to getting that new, blood-splattered horror game.

A sting operation conducted by the Federal Trade Commission between November and January found that 64% of kids were able to buy music CDs with a "parental advisory" label. But when the undercover, underage shoppers tried to buy a video game with a "mature" rating, only 13% slipped through. The other 87% were stopped cold.

For movies, 38% of kids were able to buy an R-rated DVD, while 33% were able to buy a ticket to see an R-rated movie in a theater.

 
With the exception of movie theaters, retailers improved their enforcement over 2009, and all retailers showed progress since the FTC began its investigations in 2000.

"But more needs to be done," David Fladeck, director of the FTC's Bureau of Consumer Protection, said in a statement.

The issue of media violence has taken on broader resonance as the U.S. Supreme Court ponders the constitutionality of a California law that would ban the sale of violent video games to minors and fine retailers that do so. The court is expected to issue its opinion on the case this spring.

Retailers saw the FTC report as fresh ammunition against the law.

"These numbers demonstrate once again that industry self-regulation can and does work, and there is no need for punitive government regulation, such as the California video game law," Bo Andersen, president of the Entertainment Merchants Assn., said in a statement.

But family advocates echoed the FTC's statement, praising the progress being made at retail stores, but pointed out that games, as with music and videos, are increasingly available online where there are fewer checks than in stores. The Entertainment Software Rating Board earlier this week announced that it would apply a more streamlined procedure to rate downloadable video games sold over Internet-connected consoles. The decision rattled parent advocates who feared that the new process meant that fewer games would be reviewed for compliance with the voluntary ratings system.

"It’s good to see signs that retailers are making progress on enforcing the ESRB ratings about content that’s not designed for kids," said Alan Simpson, vice president of policy for Common Sense Media, an advocacy group in San Francisco, "but as the FTC points out, there is more work to be done. The study is a reminder of how important it is to have adults making sure that unaccompanied kids aren't purchasing M-rated games – and it raises serious questions about the ESRB’s troubling decision to use computers, instead of adults, to auto-rate downloadable games.”

The report on the FTC survey included a breakdown of compliance by retailers and media. Among music retailers, Target was least strict, allowing 77% of undercover shoppers to buy CDs with explicit lyrics. Clerks at K-Mart, on the other hand, let just 29% of shoppers slip by.

For R-rated DVD movies, Target was again the most permissive, allowing six out of 10 mystery shoppers to buy, while Wal-Mart clerks let only 27% through.

Interestingly, the results were just the opposite when it came to video games. Target scored best when it came to policing games, with only 8% able to purchase an mature-rated game. Wal-Mart let 20% through, the largest percentage of the six retail chains in the survey. The inconsistency suggests that enforcement may be highly variable, depending perhaps on which clerk handled the transaction or which store was sampled. 

Among theaters, AMC Entertainment stopped nine out of 10 underage patrons from buying a ticket for an R-rated film. National Amusements prevented 55% from buying, making it the most lax of the eight theater chains surveyed.

-- Alex Pham

Chart: Federal Trade Commission

Aggressive Texas theater chain Rave to buy 35 theaters from Sumner Redstone

Media mogul Sumner Redstone's family movie circuit National Amusements Inc. has reached an agreement to sell 35 theaters to Dallas-based exhibitor Rave Motion Pictures, a person close to the matter confirmed.

Redstone will use the proceeds from the sale to help retire National's remaining debt, which was an onerous $1.46 billion until the mogul announced in mid-October that he would sell nearly $1 billion in stock in the two media companies he controls, Viacom Inc. and CBS Corp., to save his empire from collapsing.

It is unclear just how much Rave is paying for the nearly three dozen theaters, which are based outside National's core markets in New England and New York. Headquartered in Norwood, Mass., and headed by Redstone's daughter, Shari Redstone, National operates more than 1,500 screens worldwide, including The Bridge in Los Angeles and cinemas in Britain, Latin America and Russia. News of Rave's pending deal was first reported by the website Deadline Hollywood. It could be finalized in the next two weeks.

Privately-held Rave, founded in 1999, is the 10th-largest theater owner in North America, with 475 screens in 30 locations in 14 states including California, Arizona, Florida, Illinois, Ohio, Pennsylvania, Tennessee and Texas. With the addition of the National's screens, Rave will likely rank as the nation's fifth- or sixth- largest circuit behind behemoths Regal Entertainment Group, AMC Entertainment, Cinemark and Carmike.

Headed by CEO Thomas Stephenson Jr., who didn't respond to media inquiries, Rave has been on the forefront of digital cinema, and, according to its website, is the largest U.S. chain to have 100% state-of-the-art digital projection.

According to those who know the circuit, Stephenson has been a strong advocate of 3-D, pushing others in the exhibition industry to adopt the technology. He is also considered to be a tough competitor in the theater world, making some enemies along the way as he's aggressively expanded the circuit and gone up against bigger rivals in certain markets.

 Rave has accrued a fair amount of debt due to its rapid expansion. Deadline Hollywood reported that hedge fund TowerBrook Capital Partners L.P. is providing Rave the financing for the acquisition of National's theaters.

-- Claudia Eller

 

Cure for the Redstone overhang: Sell Viacom and CBS stock!

Usually when the chairman of a company dumps nearly $1 billion in stock, share prices tumble off a cliff.

But apparently not when it's Sumner Redstone.

Wall Street has dubbed the phenomenon the "Redstone Overhang." For the past year, investors have been cautious about Viacom Inc. and CBS Corp. stock after learning that Redstone's privately held company, National Amusements Inc., was in violation of bank covenants and struggling to pay its $1.6-billion debt. That caused a wave of jitters because National Amusements is the controlling shareholder of Viacom and CBS. Investors were worried that if National had been forced into bankruptcy, Viacom and CBS might suffer collateral damage.

But last week, the 86-year-old mogul -- who late last year vowed he had no intention of selling more CBS and Viacom stock -- said he would sell all of his common B shares of the media companies to pay down National Amusement's debt.

Investors cheered, and the stock of CBS and Viacom began to climb.

A week ago, the day before it was disclosed that National was selling more stock, Viacom B shares closed at $28.70  Today, they ended trading at $29.51 -- near the 52-week high. 

CBS stock has experienced a more dramatic bounce.  A week ago, CBS B shares closed at $12.15. Today the shares closed at $13.82.  That's more than three times the price fetched earlier in the year when CBS was trading for a meager $4 a share. 

In a regulatory filing this afternoon, Viacom said that National Amusements had completed its sale of 21.3 million Viacom B shares for $602.3 million.

CBS separately said Redstone had unloaded 28.6 million CBS B shares to generate $343.7 million. 

The $946 million raised in the stock sales will not entirely go toward paying debt. Commissions and taxes also must be paid. Still, the rising share prices during the last six months gave Redstone room to maneuver.  He was able to sell nonvoting stock to substantially pay down National's debt -- and preserve his empire and controlling stakes in Viacom and CBS by holding onto his voting A shares.

-- Meg James  

Photo: Sumner Redstone. Credit: AP Photo/Matt Sayles

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Sumner Redstone to unload 35 theaters including L.A.'s Bridge to help pay down debt

In addition to selling close to $1 billion in stock in CBS Corp. and Viacom Inc. to help pay down his family-held company's excruciating debt, Sumner Redstone will unload 35 of National Amusement Inc.'s 79 U.S. theaters, including its only West Coast multiplex, The Bridge in Los Angeles, according to people familiar with the matter.

The bulk of the theaters that National is selling are primarily in the Midwest and south of New York, including those in Washington, D.C.

National Amusements, whose theater circuit is based outside Boston in Norwood, Mass., and is run by Sumner's daughter Shari Redstone, will hold on to 44 of its core U.S. theaters in the New England and New York regions.

The Redstones also plan to keep National Amusements' theaters in the United Kingdom and Brazil. Though father and daughter aren't saying, it is believed they will also keep their theaters in Russia, a burgeoning market where the circuit owns four out of the top six highest-grossing cinemas in the country. National's theaters in Argentina, however, are likely to eventually be sold but are not included in the original 35 to be divested.

Earlier this year it looked like Redstone's best option to pay down debt was to sell off most or all of his cinemas. He put the circuit up for auction, attracting a number of bids both from strategic players (other theater chains) and financial parties (including private equity firms). National's investment bankers are still sorting through those offers for the 35 theaters it now plans to sell.

--Claudia Eller and Meg James

Photo: National Amusements' The Bridge theater in Los Angeles. Credit: Lawrence K. Ho/Los Angeles Times.

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