Nov. 25 (Bloomberg) -- Sumner Redstone may sell the theater chain owned by his National Amusements Inc. holding company to keep control of CBS Corp. and Viacom Inc., according to a person with knowledge of the discussions.

Redstone told bankers he is willing to part with the 1,500- screen cinema chain as a possible step to raise money and meet debt obligations, according to the person, who asked not to be named because the talks are private.

National Amusements sold $233 million in non-voting shares of the New York-based media companies on Oct. 10 to meet debt covenants. The company is seeking to refinance $800 million in bank loans that come due next month. Redstone said on Nov. 13 that no more shares will be sold and National Amusements’ asset value “well exceeds” debt.

Redstone, 85, would sell CBS before Viacom if he had to choose, the New York Times reported, citing three unidentified people briefed on the talks. The newspaper earlier reported the proposal to sell the theaters, which it said Redstone has suggested privately are worth more than $1 billion.

Attracting a premium price for the theater chain may be difficult because Redstone is a distressed seller, Chris Marangi, an analyst for Rye, New York-based Gabelli & Co., said in an interview. It’s also unclear how much debt the theater chain has and how much its real estate is worth, he said.

Asset Sales

Marangi expects National Amusements to have to sell additional assets.

“Any sale of the theaters would be part of a restructuring package,” said Marangi, whose firm is the second biggest holder of voting shares in CBS and Viacom after Redstone.

National Amusements spokeswoman Wanda Whitson declined to comment, as did Nancy Sterling, a spokeswoman for Redstone’s daughter, Shari, who runs the cinema chain.

There also aren’t many theater owners who are able to buy National Amusements, Marangi said.

The theater chain may be worth $495 million, Rich Greenfield, an analyst at Pali Capital in New York, wrote in a Nov. 20 note. The cinemas produce about $90 million in annual earnings before interest, taxes, depreciation and amortization, he estimates.

Standard & Poor’s placed Knoxville, Tennessee-based Regal Entertainment Group, the world’s biggest theater owner, on a negative credit watch last week because of debt accumulated in past acquisitions.

Potential Buyers

Asked about National Amusements on a Nov. 10 conference call, Cinemark Holdings Inc. Chief Executive Officer Alan Stock said the Plano, Texas-based chain has the ability and would consider takeovers based on price and the quality of theaters that become available.

“There potentially are acquisition opportunities out there, and we’ll just have to weed through those as the time -- as they present themselves,” Stock said then.

Regal spokesman Dick Westerling and Cinemark spokeswoman Jennifer Chreitzberg didn’t immediately return messages seeking comment today.

Viacom, owner of the Paramount movie studio and the MTV and Nickelodeon cable channels, fell 30 cents to $13.97 at 4:02 p.m. in New York Stock Exchange composite trading. The Class B shares have declined 68 percent this year.

CBS, owner of the second most watched U.S. television network, slid 7 cents to $5.92. The shares have dropped 78 percent this year.

Redstone built National Amusements, a New England movie- theater operator, into one of the biggest U.S. media companies. At the age of 63, he mounted a takeover battle for Viacom, a syndicated and cable-television programmer.

Not Nostalgic

At the end of 2005, Redstone split CBS and Viacom, with the broadcaster set up to pay a large dividend and the cable-network company designed for faster growth.

Redstone isn’t nostalgic and would likely sell the movie theaters and any other National Amusement assets to preserve ownership of CBS and Viacom, Marangi said.

“Sumner has long questioned the viability of the exhibition industry,” Marangi said. “He has always tried to maximize value, and I don’t think he lets sentiment get in the way.”

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: November 25, 2008 20:07 EST