Wiggle room for Redstone

With Nat'l Amusements debt deal, loss of CBS, Viacom control unlikely

Sumner Redstone's National Amusements has reached a definitive agreement to restructure its debt on terms previously announced, giving the privately held company breathing room as it looks to sell at least part of its theater circuit.

The agreement extends the maturity of NA's $1.46 billion debt load to Dec. 31, 2010, with certain repayments due in late 2009 and 2010. NA has pledged substantially all of its assets, including controlling stakes in CBS Corp. and Viacom, to secure the debt.

Viacom and CBS Corp. said in regulatory filings that any debt default could lead to Redstone's holding company's loss of the companies.

NA said it can repay the restructured debt with cash flow from its operations, tax refunds and the sale of assets as it sees fit. It is looking for buyers for most of the theaters in its exhibition chain.

Pali Research analyst Richard Greenfield said NA appears in the financial shape to make its year-end debt payment and is unlikely to be forced into giving up CBS and Viacom beyond that. NA could refinance the remaining $960 million of debt due at the end of 2010, he predicted. In a somewhat worst-case scenario, "NA would only need a $275 million loan to avoid selling additional Viacom or CBS shares," he said.

Meanwhile, CBS Corp. said Tuesday that it is building a dedicated online music operation. It is combining its 100 or so CBS Radio music Web sites and online streams with mobile music applications and music discovery site Last.fm to create the CBS Interactive Music Group. The combined operations reach nearly 40 million unique monthly users.

CBS Radio veteran David Goodman will lead the group as president, reporting to Neil Ashe, president of CBS Interactive. He also will continue to work with CBS Radio president and CEO Dan Mason.

"CBS is in a unique position to bring together the leading-edge technological resources at CBS Interactive with the content, promotional and sales assets at CBS Radio to drive efficiencies into the business and create unmatched experiences for all of our customers," CBS Corp. president and CEO Leslie Moonves said. (partialdiff)
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