Sumner Redstone is no stranger to drama and crises. The media mogul behind MTV, Paramount Pictures and CBS has shrugged off disputes with film stars, family members and chief executives and survived, albeit only narrowly, a hotel blaze in Boston in 1979. Now, however, the octogenarian is facing a battle with his bankers in which he may be forced into selling Viacom, MTV's owner, or CBS.

It would be a remarkable reversal for a man who has built a media empire from a small chain of cinemas, who sacked Tom Cruise after his second wife, Paula, said that she no longer liked him and who has dismissed a string of chief executives when performance has dipped.

Last week, Mr Redstone hired Citigroup and NM Rothschild to advise on restructuring $1.6 billion (£950 million) of borrowings, with an $800 million payment due to be refinanced at the end of the year amid signs of corporate distress.

Eight days ago National Amusements Inc (NAI), Mr Redstone's privately held cinema chain, which is also the holding company for his stakes in Viacom and CBS, unexpectedly dumped $233 million of stock in CBS and Viacom. A statement by NAI was forthright, describing the sale as “the direct result ... of the historic financial crisis” that stemmed from the collapse in value of Viacom and CBS stock as the credit crunch deepened. At one point, the value of Viacom and CBS shares held by NAI was only $100 million more than the total borrowings.

Rich Greenfield, a media analyst, said he believed that the share sell-off was required because “a net debt/asset covenant on one or more of National Amusements' debt obligations was triggered”. What surprised analysts was that NAI had so much debt.

Mr Redstone appears to have overstretched himself in three areas. A dispute led to his son Brent being bought out of NAI and effectively cut off from the empire. Last year Brent Redstone received $240 million, money that came directly from the family business.

Repeated buying of shares in Midway Games, a computer games developer that makes Unreal Tournament, was even more costly. NAI spent $800 million building an 88 per cent stake in a business that has lost an estimated $300 million in the past four years.

Finally came NAI's cinema business, now a national chain. Its day-to-day running rests with Mr Redstone's daughter Shari, with whom relations are strained after he signalled that she was longer going to take charge of Viacom and CBS after he dies. Shari Redstone invested heavily in upgrading the cinemas, with better seats and pianos in the foyers. The result was that the chain never generated cash and so made no inroads into debts swollen by the payout to Brent Redstone and the Midway purchases.

Shari Redstone was behind the NAI statement. It was widely concluded that, in this, she was fighting back against her father, because she did not want to be seen as bringing the family down with her spending.

None of this mattered when Viacom and CBS rode high. On Pali Research calculations, Mr Redstone's stock in the two was worth $5.5 billion at the start of this year, a figure down to $1.7 billion at the low of October 10.

Viacom and CBS have recovered slightly and the holding after the share sale is now worth $1.9 billion, but Mr Redstone is now at the mercy of the markets, as he reaches the final acts of his long career.

Boss’s view

‘Content is king’
Sumner Redstone’s words justifying the purchase of stakes in film and television studios, and eventual buying of Viacom, Paramount and finally CBS

‘I don’t want to die. I love what I’m doing. I love Viacom. I love CBS’
Redstone, earlier this year

‘We don’t think that someone who effectuates creative suicide and costs the company revenue should be on the lot’
Dismissing Tom Cruise in 2006

At stake:

— Viacom: Cable broadcaster and film studio. Owns: MTV, VH1, Paramount Pictures, DreamWorks. Revenue $13.4bn. Net profit $1.6bn in 2007

— CBS: Network broadcaster, with publishing and online assets. Owns: CBS Television, CBS Outdoor (including billboards on London Underground), CBS Radio, Simon & Schuster publishing, CNET, Last.FM. Revenue $14bn. Net profit $1.25bn in 2007.

— Midway Games: Computer game developer. Revenue $157m Net loss $99.6m in 2007

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