Is Viacom chief eyeballing Midway?

June 19, 2001 10:06 AM
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EVERYTHING’S FOR SALE! "Don’t ever forget that," explained a pipe when he called to try to convince me that Sumner Redstone, chief of Viacom Inc. (VIA), might be ready to make a strong move on Midway Games (MWY) through his National Amusements Inc.

National Amusements is one of Redstone’s pet companies. He started it as a humble operator of drive-in theaters. It is now a powerhouse that controls 68% of media giant Viacom. Its holdings include cable networks, video retailer Blockbuster (82%), Paramount Pictures, TV networks CBS and UPN and publisher Simon & Schuster. And, of course, WMS Industries (WMS) and Midway Games.

"Keep in mind that Redstone already owns at least 28% of Midway and is still buying more of their stock.

"Midway is run by Neil Nicastro. He makes no secret that his company has a product lineup that will move Midway to a spot just a notch below the industry leader, Electronic Arts.

"I never knew Neil to speak with a forked tongue. He tells you what he thinks.

"At the same time, keep in mind that Redstone also owns 25% of WMS. When he was licensed as an owner of WMS, he agreed not to vote the stock of that company. Not so with Midway.

"Are you getting the same message I am?" the pipe asked.

Maybe the pipe is on to something. I know for a fact that Redstone fell in love with game maker Midway, which originally was part of WMS and spun off. Could it be that Redstone sees a takeover wave among video game makers? If so, it would certainly make Midway worthy of your attention.

Midway closed Monday at $16.24, up 74 cents on heavy volume. Its 52-week high was $15.50, the low, $6.12.

ANOTHER SIDE OF BETM! Although there may be miles to go before he can sleep, Vic Salerno, top gun at American Wagering Inc. (BETM), is making headway with the company, explained a pipe.

"Last year was a tough year for the company," the pipe continued. "Vic tightened the belt to curb the red ink. That, plus a gain of nearly $1 million, turned a negative into a positive. Earnings per share came in at 4 cents versus a loss of 20 cents the previous year.

"There’s more. In the most recent quarter, BETM reduced the loss for the period by 80%. The tight belt is working.

"With football season right around the corner, don’t be surprised to see BETM surrounded in black ink," the pipe concluded.

SMOKE GETS IN YOUR EYES! That’s a beef many casino employees have. However, unless all casinos ban smoking, it’s not going to disappear.

"But," said a pipe, "there may be something they’re not aware of. A study of slot floors shows that the areas that permit smoking substantially out-handle the non-smoking sections percentage-wise and otherwise.

"There are exact figures proving that smokers gamble more earnestly than do non-smokers. But they are hush, hush."

A little traveling music, maestro:

"Smoke, smoke, smoke that cigarette!"

NEW KID ON THE BLOCK! New Mexico’s booming Indian casino industry has a new player - Santa Clara Pueblo. The 48,000-square-foot casino and bowling alley opened last week in Espanola.

"The new kid will offer higher betting limits than its rivals. If that’s not enough, you can cash personal checks with no fee attached," said a rosebud. "Rivals charge a fee."

At the outset, Santa Clara Pueblo opened with 200 employees. It will add another 100.

SPRING CLEANING a few days before summer arrives. The buzz in Jazz City is that Phil Satre, chairman and chief executive of Harrah’s Entertainment (HET), is cleaning house at its New Orleans casino.

"It’s being done in the name of cost-cutting," said a rosebud. "I hear chief Fred Burford, who has been the top gun at the financially troubled casino since 1997, will soon be history.

"Satre believes that the time is right to realign JCC Holding. JCC will continue to mind the store but with a focus on public company accounting and reporting responsibilities. Although HET and JCC are separate companies with separate boards of directors, things are changing drastically.

"Look for the property to fall more and more under Harrah’s corporate organization."

From another source: "No one can blame Satre for wanting to save money by eliminating management. Satre will likely remain on the board of directors along with a bankruptcy lawyer. There will be a newcomer, Chris Lowden, former executive vice president of operations at Santa Fe Gaming Corp. in Las Vegas.

"Fred Keeton, vice president of community relations and government affairs at JCC Holding is likely to step up to the plate to oversee government relations in Louisiana and Mississippi. HET will play a larger role in the game and is part of the cost-saving reorganization."So what happens if Burford is out?

Said a pipe: "Paul Debban is a likely candidate to be named president of JCC Holding. Why not? He is managing director of a firm (Seidler Cos.) that has put up some dough-re-mi to help the cause."

FLYING HIGH IN APRIL, SHOT DOWN IN MAY! That’s life as it was in April 1999 when PurchasePro.com, the Las Vegas-based business-to-business company, had such strong appeal to investors. The stock price soared from an IPO of $14 to $180 a share. But like so many other dot-commers, the year 2000 brought reality.

However, hope sprang eternal for a number of big investors. One gaming executive was so impressed he bought 750,000 shares at $49 a pop. The stock has been downhill since. Earlier this year, the stock was listed at about $10 a share. But the word was out that insiders were selling off at a rapid rate. It was before the SEC filing problems developed and the stock took a nosedive to $2 a share and former CEO Junior Johnson moved out.

Now comes word that the new management team will cut its staff by 50%, bringing the total number of employees to fewer than 300.

BINGO IS HOT! Did you know that a number of Las Vegas casinos offer bingo seven days a week? They include Arizona Charlie’s West, Fiesta, Gold Coast, Palace Station, The Reserve, Sam’s Town, Santa Fe Station, Suncoast, Sunset Station, Texas Station and Western Hotel.