A bankruptcy court judge has recently approved Warner Bros. proposed $33 million buyout of Midway, as well as two of its studios and select assets from the financially stressed publisher, the most valuable of which is arguably Mortal Kombat.

The judge confirmed that any objections to the deal (and there were many) had been resolved, clearing the way for the acquisition to go ahead.

The deal, however, does not included two of Midway’s development studios, Midway San Diego and Midway Newcastle, both of which have 60 days to find a suitable owner. If this does not happen, the studios will be shut down.

After a sale and bid procedures motion was filed by Midway in late May, which served to notify potentially interested third-parties that a sale to Warner Bros. (a subsidiary of Time Warner, Inc.) was imminent, giving those third-parties an opportunity to put in their own bid for Midway and its assets, it appears as though Warner Bros. has emerged as the sole bidder before the deadline for new bids recently expired.

Now, with a bid of $33 million, Warner Bros. stand to secure ownership of a vast majority of Midway’s assets, including the Mortal Kombat, Spy Hunter, Joust and Wheelman franchises, as well Midway’s development studios in Chicago and Seattle.

The fate of Midway’s Newcastle and San Diego offices, which are not included in the deal, remains unclear at this time.

Before Warner Bros. can officially claim ownership of the agreed upon assets, however, several creditor complaints will need to be resolved, including one by Threshold Entertainment’s Larry Kasanoff, who produced two Mortal Kombat films and still claims possession of the franchise’s big-screen and TV distribution rights, and another complaint by the Vin Diesel-owned Tigon Studios, which claims it is owed $200 000 for Diesel’s work in Wheelman.

In a press release issued a little while ago, troubled games publisher Midway revealed that they have entered into a “stalking horse” asset purchase agreement with entertainment gargantuan, Warner Bros., a subsidiary of Time Warner, Inc.

Additionally, Midway have filed a sale and bid procedures motion with the US Bankruptcy Court, which serves to provide notice that a sale to Warner Bros. is imminent, giving interested third-parties the opportunity to enter their own bids for Midway’s assets.

Under Midway’s current agreement, however, Warner Bros. stand to acquire a substantial amount of Midway’s assets, including the Mortal Kombat franchise and development studios in Chicago and Seattle, for a total of $33 000 000, subject to further adjustments.

The current agreement does not, however, include Midway’s San Diego or Newcastle development studios, nor their TNA wrestling franchise.

Midway, Warner Bros. and interested third-party buyers will enter into a bidding process before and after an expected court approval of the Warner Bros. agreement, at which time further Midway assets will be formally bid upon.

Hopefully this whole process will bring to an end the troubled times that Midway has been having, especially over the last year.

Activision Blizzard is reporting $981 million in revenue for the last quarter of their fiscal year ending on March 31st, with $189 million in profits, which they say is all thanks to the continued impressive performance of games in their Guitar Hero and Call of Duty franchises.

Guitar Hero and Call of Duty, the company claims, remain two of the top five best selling franchises in the US and Europe, as Guitar Hero: World Tour became the best selling third-party title in the US across all platforms (in dollars), and is the best selling third-party title on the Wii – the only third-party title to crack the top five best selling games on the platform.

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Nintendo have reported record annual sales and profits for the fiscal year ending March 31st this year, with net sales reaching a 10 percent year-on-year increase to $18.5 billion, with net income posted at $2.8 billion (a nine percent increase) and operating income at $5.6 billion.

Nintendo also reported hardware sales milestones for its two key consoles, as the Wii sold 25.95 million units over the last fiscal year, with life-to-date sales at 50.39 million, which makes it, according to Nintendo, the “fastest home video game hardware in history.”

The DS, meanwhile, managed to sell 31.18 million units over the last fiscal year, as life-to-date sales figures are pushed to 101.78 million units, which means that the DS “exceeded 100 million units faster than any console or handheld video game hardware in history.”

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EA has reported full year revenues of $4.2 billion, a 15 percent increase from last year, on the back of a net loss of $1.08 billion, as compared to losses of $454 million last year, as a result of $820 million in expenses.

EA’s fourth quarter losses were also less than expected, with $42 million in losses as of March 31st, as opposed to $94 million during the same period last year. Fourth quarter revenues slid to $860 million (down $267 million year-over-year) thanks to sales of Skate 2, Rock Band 2, Lord of the Rings: Conquest, Left 4 Dead and Need for Speed Undercover.

EA also revealed that 31 of their released titles have sold more than one million copies over the last year, with Fifa 09, Madden NFL 09 and Need for Speed Undercover each reaching over five million copies sold, while Spore sold over two million copies.

“EA is well positioned with the right strategies in a growing industry,” said EA’s CEO, John Riccitiello.

In a bit of news that will probably shock no-one, the ailing publisher Midway has been removed from the New York Stock Exchange listing, after failing to meet the requirements for trading.

A company has to maintain a share price of at least $1.00 for 30 consecutive days to remain listed on the NYSE - a requirement Midway was reminded of back in November, but has obviously failed to meet.

This news comes after slightly better information that Midway’s Vin Diesel-starring vehicle-based action game, Wheelman, will be co-published with Ubisoft around the world, as Ubisoft handle distribution, sales and marketing duties in most territories, while Midway will continue development with Vin Diesel’s Tigon Studios.

There are also reports that Midway has left the Entertainment Software Association, most likely do to an inability to pay membership fees, which kind of counters the above good news…

Midway Games Inc., the US division of Midway, has filed for reorganisation under Chapter 11 with the Bankruptcy Court. This filing does not include Midway’s non-US operations (Midway’s European divisions), and they will continue business as normal.

Midway cited the change of ownership last year, when Sumner Redstone sold the company for $100 000, as the trigger event that accelerated Midway’s need to repay debts amounting to $150 million, $75 million of which was due yesterday. Midway chairman, President and CEO (that’s a busy business card), Matt Booty said:

“This was a difficult but necessary decision. We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure.”

Even in the face of this decision on Midway’s part, Booty was still keen to remind that Midway’s fourth quarter financials were comparatively strong, as evidenced by the fact that Mortal Kombat VS DC Universe has shipped close to two million units, TNA Impact has shipped an additional one million units, and Midway’s Party Game franchise has sold close to three million units.

Midway’s bankruptcy filing will protect them from creditors, allowing them to continue business ‘as usual,’ as they seek to address their capital structure. After an incredibly difficult 2008, this move is hardly surprising, but no less saddening.

THQ has posted its third quarter financial results, and as a result of the company’s poor performance, they plan to lay off 600 employees, as well as execute plans to lower their running costs and focus on fewer, and better, core game titles. THQ’s third quarter losses were posted at $191.8 million, with revenues at $357.3 million, a drop of 30 percent from the same period last year.

Despite the poor results, THQ reaffirmed it’s belief that they provided a meaningful and improved product portfolio during the quarter, as Saints Row 2 shipped 2.6 million units, WWE SmackDown VS Raw 2009 shipped 4 million units and De Blob shipped 700 000 units, all of which achieved a Metacritic rating of 80 percent or higher, while Big Beach Sports shipped 1.2 million units. THQ president and CEO Brian Farrell said:

“We delivered high quality games to market this holiday season but fell short of our revenue and profit targets in this challenging environment.”

THQ is now focussing on reducing spending and cost-cutting initiatives, after successfully executing their previously announced plan to reduce their cost structure by $120 million, planning to reduce costs by an additional $100 million. 600 THQ employees will also be made redundant. Farrell continued:

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EA has revealed its third quarter earnings and it doesn’t look pretty, which is prompting the studio to expand its restructuring and cost-cutting efforts announced last year.

EA reported a third-quarter loss of $641 million, as compared to $33 million during the same period last year, while revenue rose to $1.65 billion compared to $1.5 billion in the third quarter last year, with $88 million in deferred revenue from EA’s online ventures.

Prompting the growth in revenue were bestsellers Fifa 09 with 7.8 million copies sold, followed by Need For Speed: Undercover, selling an unexpected 5.2 million copies. Additionally, Warhammer Online has 300 000 paying subscribers as of the end of the third quarter.

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Last year it was reported that Free Radical (Time Splitters, Haze) was in a state of administration, a process by which a third party attempts to sort out another company’s financials. While it was widely reported at the time that Free Radical was closing, no such decision had been made at the time.

Over the Christmas break, however, news broke that Free Radical would be reducing its staff by a whopping 140 members, leaving the company with an effective skeleton staff of 40 developers. Not only that, but the company is now officially up for sale with interested parties already showing curiosity over the potential of buying Free Radical. Resolve Partners’ Cameron Gunn said:

“We made around 140 employees redundant yesterday (December 23rd 2008), effective 31 December (the date up to which they had been paid). We’re still trading on with the remaining 40 or so employees, have advertised the business for sale and have received some strong interest.”

Hopefully everybody lands (or has already landed) on their feet.

It’s been revealed that Midway are to close their Austin offices, reduce staff by 25% and halt development on current projects.

The frozen projects in question are games that have not yet been announced, with projected release dates during 2010 and 2011, and are considered by Midway to be “non-core” projects. The closure of Midway’s offices in Austin, which housed Midway’s Central Outsourcing Group, encompasses some of the projects that are now indefinitely suspended. Projects that are known to remain in development include The Wheelman, This is Vegas and a TNA Wrestling franchise game.

The 25% reduction in workforce (roughly 180 employees laid off), however, affects Midway’s operations in Chicago and San Diego in the US, as well as the Austin office. $1.6 million in severance is expected to be paid out to redundant employees. President and CEO of Midway, Matt Booty said regarding the announcements:

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Ea have revealed that holiday sales performance for the current slate of recently released games has not met expectations and, as a result, cost-cutting actions will have to be taken.

The cutting involves dropping planned titles from its release schedule next year, while the reduction of EA headcount and the need to consolidate studios was also mentioned. EA CEO John Riccitiello said of the results:

“While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations. While we are cutting costs, we remain committed to investing in great game quality, in new properties and in our direct-to-consumer initiatives. We will be launching several new titles and online games in fiscal 2010.”

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In what is amounting to an extremely terrible year for Midway, it is being reported that a majority stock holder, Sumner Redstone, has sold his 87% stake in the company for only $100 000 and what amounts to $0.0012 cents a share.

Redstone, a media mogul and head of holding company National Amusements, has been experiencing financial troubles of his own as National Amusements is $1.6 billion in debt, half of which needs to be repaid by year end. To this end, the company has already sold roughly $230 million in shares from their controlling stakes in CBS Corp. and Viacom, to help make up for the debt.

To further ease the load, Redstone will be selling his majority stake in Midway to Mark Thomas, a private investor and the head of MT Acquisition Holdings LLC. It is believed that, through the sale, Redstone will gain significant tax benefits, while Thomas will inherit Midway’s $70 million worth of secured and unsecured debt.

Midway’s biggest games this season have been Mortal Kombat VS DC Universe and Blitz: The League II. Hopefully they sell well.

Shares in Nintendo Co Ltd hit a record high today, up to 64,800 yen. Supposedly the jump of 2.7% up was caused by Goldman Sachs rating the company a “buy” with a target price of 71,000 yen.

Nintendo is currently the third largest company in Japan by market capitalisation (the sum value of all its shares in issue), but is still short of the value of Apple, but Goldman Sachs say they could get close to those levels. Apple’s high valuations are because of its “innovative business model”, a model Nintendo seem to be emulating in creating new markets for the Wii and DS.

There is also speculation that Nintendo will raise its earnings forecasts after selling so many Wii and DS consoles this year. It has already raised its forecasts once this year but the consensus of analysts has it earning quite a bit higher than those forecasts.

Source: Reuters