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Fighting a Battle, Redstone Lightens CBS and Viacom Load


National Amusements raises cash by selling shares.

National Amusements plans to sell a portion of its stock in CBS Corporation (CBS) and Viacom (VIA) to repay debt.

National Amusements has no plans to further reduce its holdings in CBS or Viacom and will retain about 75% of the voting control of each company when the sale is complete.

"As a result of our actions, National Amusements will be out of debt with its existing creditors and will still control its most important assets," Sumner Redstone, chairman and CEO of National Amusements, said in a prepared statement.

In February, National Amusements struck a deal to restructure about $1.6 billion in debt, pushing the maturity of the debt to December 31, 2010.

Sale of CBS stock is expected to raise about $345 million and sale of Viacom shares is expected to raise about $600 million.

Like other movie exhibitors, National Amusements must prepare to battle DVDs and video on demand.

National Amusements operates about 1,500 movie screens in the United States, United Kingdom, Latin America, and Russia under the Showcase, Multiplex, Cinema de Lux, and KinoStar brand names. The company also holds a stake in, a joint venture launched in 2000 with AMC Entertainment, Cineplex Galaxy, Hollywood Media (HOLL), Marcus (MCS), and Viacom.

So far, the movie business appears to be recession-proof. Box Office Mojo reports that 2009's box office receipts through October 12 total $8.1 billion, up 6.8% from the same period a year ago, with no increase in the average ticket price. But the movie theater industry faces major challenges ahead from Netflix (NFLX) and video on demand.

Movie studios now earn more revenue from DVD sales and rentals than theater ticket sales, suggesting theaters in the future will serve more as a marketing tool to showcase new releases and become less important to the bottom line.
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