In the quarterly conference call by Viacom, Sumner Redstone said he was close to a deal with his lenders to restructure the $1.6 billion of debt at National Amusements Inc. (NAI) which has been overhanging both Viacom and CBS Corporation. NAI is the vehicle by which Redstone holds control of both companies. About half that debt was due, but not paid, before the end of 2008. Redstone reiterated yesterday that the deal being put together will not require NAI to sell any more shares of CBS or Viacom.
Redstone shocked CBS and Viacom shareholders when he sold $233 million worth of stock to keep NAI from breaching loan covenants. Since then, he has repeatedly insisted that he will not sell another share. Those statements have been intended to calm investor concerns that Redstone might be forced to dump shares to raise cash, which could glut the market with CBS and Viacom shares, driving prices lower.
Word that a deal with the bankers was near and that there would be no stock sales was at least come consolation for Viacom shareholders. The company reported that Q4 earnings fell 69% to $173 million, mainly due to a $454 million write-down for restructuring costs. Revenues were flat at $4.24 billion, but operating income fell 51% to $475 million, mostly due to the massive write-down. Revenues for the cable networks rose 1% to $2.48 billion, driven by a jump in international fees. Filmed Entertainment revenues fell 2% to $1.81 billion.