Game over for Sumner Redstone

Think your stock market investments have gone sour? That's nothing compared with the bad bet made by billionaire Sumner Redstone, who blew an estimated $600 million on just one company.

For years, Redstone has been accumulating nearly 90% of Midway Games, best known for the "Mortal Kombat" line of video games. But in three years, Midway shares have plummeted from $19 to 33 cents, and quarterly numbers have been abysmal.

So Redstone decided to bail, selling his 80.3 million shares for less than a penny each. Analysts estimate his losses at around $600 million. That's gotta hurt, even for someone like Sumner Redstone, who is the executive chairman of both CBS and Viacom.

"It's big enough to feel the pain," said analyst Michael Pachter.

But Redstone has a plan. He's going to use the loss to offset the taxable gains his holding company is getting from selling assets. His holding company, National Amusements, is trying to restructure $1.6 billion in debt, half of which is due later this month.

National Amusements is also considering selling the movie theaters it owns and its stake in a slot machine supplier, according to the Associated Press.

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Comments

 

There is a reason why Sumner Redstone dumped his shares of the company.   At this time of year, investors traditionally review the stock portfolio to consider whether or not to sell any of the stocks that really have no prospect of recovery in the short-term.  The sale of such losers generates capital losses which can be offset against the profits from the stock winners during the year effectively resulting in a reduction in the total tax liability of the investor.  This strategy is commonly known as tax loss selling.  More info at http://www.TaxLossSelling.com  

Mick (Posted 12.02.08 2:40 PM) Report Abuse

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