Sumner Re-Arranges the Deckchairs

David Card | November 08, 2005, 10:00 PM

I can't say this cynicism is off-base.

Redstone hopes that this maneuver will dazzle Wall Street into increasing the share price of both parts of his divided empire. In fact, both sides will be managed exactly as they are now: Tom Freston will continue to head the Viacom side, and Leslie Moonves will continue to head the CBS side. More important, control will continue to be in the hands of Redstone...

How will Redstone fit Midway into his twin empire? The speculation inside Viacom is that first he will take Midway private by buying up the rest of the shares (indeed, a wire story today reports that Redstone has increased his holdings to 89 percent), and then he will resell it to Viacom at a hefty price (his rapacious buying of the stock has driven up its price nearly fourfold, even though Midway itself continues to lose money). To keep the purchase from appearing to be incestuous self-dealing, Redstone will no doubt delegate the job of determining the purchase price to a committee of independent Viacom directors.