on Friday acknowledged what some have long
speculated: that CEO Sumner Redstone's investment in
could lead Viacom to acquire the video-game software company.
The media giant has "from time to time" considered getting into the video-game business, according to a filing by Redstone that updated his stake in Midway. Three unnamed independent members of Viacom's board are now working with the company's management to evaluate potential opportunities, according to the filing.
"In this regard, Midway could be considered as a potential licensee of Viacom intellectual property, or as an acquisition candidate," according to the filing.
Prior to Friday's filing, Redstone had said that his investment in Midway was a "personal" matter, unrelated to Viacom.
The company assigned the three independent board members to the job "in order to prevent even the appearance of a conflict of interest," according to the filing.
Redstone personally owns nearly 56 million shares of Midway stock, or about 66.5% of the company's outstanding shares. Additionally, National Amusements, a company that Redstone controls and is in turn the controlling shareholder of Viacom, owns another 6 million shares of Midway, or 7.2% of the company's outstanding stock.
For much of the last two years, Redstone has been amassing shares of Midway. His investment has raised eyebrows on Wall Street, because of Midway's poor financial track record and the price he has paid for the company's stock.
The video-game company, which publishes
, among other titles, has not had a profitable quarter since 1999, and until last fall, its stock was trading below $3 a share. In recent months, Midway's stock surged, trading recently at $12.54 a share, up 221% in the year to date.
Many analysts and investors have attributed the stock's rise to Redstone's purchases. Instead of issuing a tender offer for Midway's shares or buying them in large chunks, he's made numerous smaller purchases on the open market. Since November, Redstone has purchased some 46 million shares of Midway, and National Amusements has bought another 2 million shares.