All this hot air that Sumner Redstone may have to give up control of CBS Corp. or Viacom Inc. to satisfy debt covenants overlooks a couple of cold facts.
The first fact is that National Amusements Inc., the Redstone-controlled company confronting an $800 million maturity at the end of this year, could sell the rest of its nonvoting shares of CBS and Viacom for more than $500 million. Add this to the $233 million in CBS and Viacom shares that privately held NAI has already sold, and total proceeds would be pushing $750 million.
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So, to make its $800 million payment, NAI would need only an extra $50 million or so. Certainly a number of the 1,500 screens the movie exhibitor owns and operates around the world could be pledged to secure that amount. But even if such an effort were to fail, a second fact worth noting is NAI's "equal partner" status in online-ticketing service MovieTickets.com.
While it's difficult to parse exactly what "equal partner" means in percentage terms, NAI's two public partners in MovieTickets.com provide insight. AMC Entertainment Inc. and Hollywood Media Corp. each reports having a 26.2% stake in the online ticketer, leading us to believe NAI owns that much, too.
A mere 25% stake in MovieTickets.com, which could easily be sold to another of NAI's partners in the enterprise, would get Redstone past the year-end maturity. That's because Ferris, Baker Watts Inc. estimated the value of MovieTickets.com to be between $200 million and $300 million. And that was before it turned profitable two years ago.
All these assets could be shed -- and would be shed -- before Redstone considers reducing NAI's CBS holdings of 46.8 million Class A voting shares (or 79.8% of the class) and Viacom holdings of 46.8 million Class A voting shares (or 81.6% of the class). Anyone who thinks otherwise has no understanding of the lengths to which the self-styled "founder" of CBS and Viacom is prepared to go to sustain control. - Richard Morgan
Richard Morgan is a senior writer for The Deal.
