Midway Games
From Invertopedia, the encyclopedia of how things fail
Midway Games was a video game publisher whose Mortal Kombat series sold more than 20 million units across eight console releases[1]. It reported an annual operating profit last in fiscal 1999 and an operating loss of $78.4 million in 2007[1]. It filed for bankruptcy in February 2009, and a Delaware judge approved the sale of most of its U.S. assets to Warner Bros. in July 2009[2][3][4].
What happened
| Fiscal 1999 | Last year Midway reports an annual operating profit.[1] |
|---|---|
| Feb 2008 | Sumner Redstone and related parties own about 87 percent of Midway's common stock.[1] |
| Dec 2008 | Midway says it will lay off 25 percent of its staff, about 180 people, and close its Austin studio.[2] |
| Feb 2009 | Midway files for bankruptcy after Redstone sold his majority stake.[2] |
| May 21, 2009 | Warner Bros. makes a $33 million stalking-horse bid for most U.S. assets.[2] |
| Jul 2009 | A bankruptcy judge approves the sale, with a gross price of about $49 million including assumed liabilities.[3][4] |
The kill shot
One hit series carried a company that lost money for years, and when its controlling owner sold out and the debt came due, there was nothing left to carry.
Midway's own filing said it had last made an operating profit in fiscal 1999, and that one holder beneficially owned about 87 percent of its common stock[1]. After that holder sold, CNBC reported Midway could not meet its debt obligations[2].
The inversion
A franchise is not a business. If one series pays for years of losing bets and one owner pays for the losses, plan for the day either one stops.
References
- ^ “Midway Games Inc. Form 10-K for 2007”. Midway Games filing with the SEC, 2008. Mortal Kombat sales, last operating profit year, 2007 operating loss, Redstone's share.
- ^ “Warner Brothers Bids for Midway Games Assets”. CNBC, May 21, 2009. Bankruptcy in February, Redstone sale, $33M bid, December layoffs.
- ^ “Midway's assets sold to Warner Bros. for $33 million”. TechCrunch, July 2, 2009. Court approval of the $33M sale, reported July 2, 2009.
- ^ “Midway Games Inc. Form 8-K, July 2009”. Midway Games filing with the SEC, July 2009. The roughly $49 million gross price including assumed liabilities.