This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Redstone's Midway Foray Goes Beyond Personal Interest

Updated from 10:31 a.m. EDT

Sumner Redstone's move to seize control of Midway Games (MWY) may end up rattling the entire video-game software industry.

Since November, Redstone has more than doubled his stake in Midway; a regulatory filing posted Monday revealed he now holds 71% of the company's shares. The Viacom (VIA.B) CEO has already nominated two director candidates and could ultimately handpick the successor to Midway Chairman Neil Nicastro, who announced his resignation Friday.

Though Redstone has denied it, some analysts believe his takeover of Midway is an attempt to get Viacom into the video-game software industry, which could have far-reaching implications.

In a narrow sense, Redstone's wheeling and dealing would most directly affect Activision (ATVI - Get Report), which has developed games based on Viacom's movie and television properties, and, more significantly, THQ (THQI). Of the $640.8 million in revenue that THQ posted last year, analysts estimate that 15% to 25% came from its Viacom titles.

If Viacom absorbs Midway, "the big risk is on THQ," said one fund manager, who has no position in THQ or Midway.

More broadly, the media mogul's Midway moves could touch off a bidding war by rival entertainment companies for the other video-game makers.

"I think they're in play," said Michael Pachter, who covers the video-game software industry for Wedbush Morgan. Entertainment companies "are all copycats. If one guy buys a TV network, the other one has to buy one, too." (Wedbush Morgan has no banking business with Midway or the other major video-game companies; Pachter does not hold shares in the companies he covers.)

Other video-game stocks may well benefit if Redstone rolls Midway into Viacom, or if Viacom makes other purchases in the sector. Such a move would "set a precedent" of a big entertainment company buying its way into the video-game publishing business, said Pachter.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
THQI $0.31 0.00%
VIA.B $0.00 0.00%
ATVI $23.10 0.00%
DIS $106.35 0.00%
SNE $27.83 0.00%


DOW 18,203.37 -85.26 -0.47%
S&P 500 2,107.78 -9.61 -0.45%
NASDAQ 4,979.9010 -28.1950 -0.56%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs