This weekend the New York Post reported that Sumner Redstone might be forced to sell either Viacom or CBS in order to pay off loans taken out by his privately held National Amusements, Inc. movie-theatre chain. But rumours of a Viacom or CBS sale surface every few months, so why should we believe this report more than the others?
Well, maybe we shouldn’t. But, neither Viacom nor CBS is denying it. Granted they’re not confirming it either, but no one from either company has said the report is untrue; they’re just not commenting. Also, Sumner needs money to pay off that National Amusements debt, which makes the sale a realistic possibility.
NY 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 theatre 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.
Nonetheless, there are other ways for Sumner to raise the cash he needs.
Despite the urgent need for cash, the sale of Viacom, CBS or any part of the companies is not a sure thing. Redstone, a master negotiator, could still head off a sale by renegotiating the terms of the bank loan, someone familiar with Viacom said…
Viacom…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.
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