Redstone: Viacom, CBS Stock Sales 'Highly Unusual'
November 4, 2008 at 5:11 AM (PT)
Real estate has emerged as SUMNER REDSTONE's likely solution to the debt crisis at NATIONAL AMUSEMENTS, his private holding company. TODAY's NEW YORK POST reports the media mogul hinted on VIACOM's third-quarter earnings call yesterday that his position as the owner -- rather than the renter -- of the land on which NATIONAL AMUSEMENTS' movie theaters sit could be leveraged in refinancing talks with the banks.
Redstone has called NATIONAL AMUSEMENTS' recent sale of $233 million of CBS and VIACOM stock "highly unusual" and "clearly atypical," noting the company had no intention of selling additional shares.
NATIONAL AMUSEMENTS has $1.6 billion of debt. An $800 million portion has to be repaid by DECEMBER and requires 50% approval from the lending syndicate for its terms to be changed. The rest is a private placement, which requires unanimous approval from all 55 banks before its terms can be changed.
For the third quarter, VIACOM collected $3.4 billion in revenue, up 4% from the prior year. Operating income of $689 million and adjusted diluted earnings per share of 55 cents were both down 15% from 2007 results. Net profit plummeted 37% to $401 million, or 65 cents a share, from $641 million, or 96 cents.
VIACOM CEO PHILIPPE DAUMAN said advertising softness at its networks -- where domestic ad revenue declined 3% -- was compounded by "challenged" ratings at MTV, VH1 and BET.
In related news, HANK CLOSE, Pres./Ad Sales at MTV NETWORKS, yesterday announced he would resign at year's end.