Midway cuts games, staffers
Video game company reducing workforce by 25%NEW YORK -- In its first major move since Sumner Redstone sold a controlling stake, video game company Midway Games unveiled several cutbacks Tuesday, including a 25% staff reduction.
The company behind the "Mortal Kombat" franchise has struggled to create new hits and said the economic downturn has "amplified" its challenges.
Overall, video game sales have remained strong across the industry despite economic woes.
In addition to the layoffs of about 180 employees in its Austin, Chicago and San Diego offices, Midway also is shuttering an Austin studio and suspending development work on unnamed, noncore games that had been scheduled for 2010 and 2011.
In a regulatory filing, Midway said it expects to incur a charge of about $21.7 million in the fourth quarter to account for the streamlining.
"The cost-reduction measures are vital for us to rationalize our operations and provide the resources necessary for our core properties to succeed," Midway president and CEO Matt Booty said.
Redstone's holding company, National Amusements, recently sold its 87% stake in Midway to little-known investor Mark Thomas.
NA has been in negotiations with its banks to restructure a $1.6 billion debt pile after breaching a debt covenant in October.
Half of that debt comes due Friday, but sources have said the two sides may continue talks beyond that deadline without the bank requiring immediate payment. NA is expected to sell some or all of its movie theaters.