Billionaire Sumner Redstone got caught in the credit crunch Friday.
The 85-year-old mogul, who has long bragged about his financial savvy and competitive drive, was forced to sell a fifth of his family’s stake in his two media companies — Viacom Inc. and CBS Corp. — on a day when the companies’ shares were trading at record lows… On the most volatile trading day in the stock market’s 112-year history, Redstone’s family’s holding firm, National Amusements Inc., had to dump $400 million of nonvoting B shares in Viacom and CBS to raise cash to "pay down debt to comply with covenants under [the company’s] credit agreements," according to a statement from National Amusements…
Regulations require companies to publicly provide financial guidance whenever insiders sell large blocks of stock shortly before earnings reports are released. CBS is scheduled to release third-quarter results Oct. 30, and Viacom on Nov. 3.
The revised guidance issued Friday was bleak. Both Viacom and CBS lowered earnings estimates, blaming the world financial crisis for weaker advertising sales. They said the situation could get worse.
Why, if this was a movie and there weren’t jobs and pensions at stake, this would kind of satisfying to watch.
Yesterday, the chairman of CBS’s parent company chose Hong Kong as a place to drop a little bomb. Sumner Redstone, who calls himself a "liberal Democrat," said he’s supporting President Bush.
The chairman of the entertainment giant Viacom said the reason was simple: Republican values are what U.S. companies need. Speaking to some of America’s and Asia’s top executives gathered for Forbes magazine’s annual Global CEO Conference, Mr. Redstone declared: "I look at the election from what’s good for Viacom. I vote for what’s good for Viacom. I vote, today, Viacom.
"I don’t want to denigrate Kerry," he went on, "but from a Viacom standpoint, the election of a Republican administration is a better deal. Because the Republican administration has stood for many things we believe in, deregulation and so on… from a Viacom standpoint, we believe the election of a Republican administration is better for our company."
Well played, sir.