NY Post: Redstone May Sell Viacom Or CBS
October 20, 2008 at 5:18 AM (PT)
Media mogul SUMNER REDSTONE, caught in the vise-like grip of the credit crunch, may be forced to sell his prized VIACOM INC., home of MTV, NICKELODEON and PARAMOUNT STUDIOS, writes TODAY's NEW YORK POST.
Sources close to REDSTONE and VIACOM say the executive's current cash situation is so dire that selling VIACOM or CBS -- which he also controls -- is now a real possibility. REDSTONE used shares in the companies as collateral for loans used to back expansion plans for his privately-held NATIONAL AMUSEMENTS, INC. movie theater chain.
As the price of VIACOM and CBS shares dipped, the banks are demanding cash to back the loans.
"SUMNER needs more money," said one source with knowledge of the situation. A second source described the situation as grim enough that the sale of pieces of CBS -- like some radio stations, or the publisher SIMON & SCHUSTER -- or some of the VIACOM properties would not be enough to cure the cash shortfall.
That's because if CBS sells a unit the proceeds from the sale would stay with CBS and not flow up to REDSTONE's NAI.
However, proceeds from the sale of all of CBS would flow to NAI.
A source close to CBS said that REDSTONE was already looking at his entire portfolio to identify possible sale candidates. VIACOM, this person said, is more valuable, but would be harder for REDSTONE to sell as he has carefully built the company over the years and considers its properties like his children. There is less emotional linkage to CBS, making it easier for him to sell, but it would not bring in as much as VIACOM would.