Sumner Redstone has hastily offloaded his controlling stake in the computer games company behind Mortal Kombat, triggering a loss of about $800 million (£540 million) on years of investment.

The move is the first step in a desperate restructuring of the American media mogul’s operations, as he grapples with $1.6 billion of debt that threatens to bring his empire, stretching from MTV to CBS, to its knees.

Mr Redstone agreed to sell his 87.2 per cent holding in Midway Games for only $100,000, at 0.12 cents a share – a significant discount to the 38 cents that the stock was trading at before the deal was announced.

The buyer is Mark Thomas, a low-profile investor, who assumes $70 million in debt at a company that has struggled to generate hits.

Sumner Redstone has to refinance $800 million of his $1.6 billion of debts at National Amusements, his private holding company, before the end of the year, amid speculation that the negotiations will be tough.

After the Midway share sale was first mooted last week, Rich Greenfield, a media analyst with Pali Research, said that the refinancing could become complicated as the 55 lending banks tried to offload their debt. “Active trading in the bank debt could dramatically increase the number of holders of NAI’s bank debt, making a restructuring far more difficult to achieve,” he said in a research note.

The borrowings were long secured against Mr Redstone’s holdings in Viacom, the owner of MTV, and the separate CBS Corporation, but the credit crunch has hit the value of both hard. Yesterday, his Viacom and CBS shares were worth $1.43 billion, insufficient as collateral on new loans.

However, Mr Redstone has insisted that he will not sell another share in Viacom or CBS and he is expected to try to divest some of his smaller assets, with the Midway sale generating large tax losses to help to offset any further disposal proceeds.

Mr Redstone is the largest investor in WMS Industries, the quoted slot-machine maker, with a holding worth around $90 million, and that stake is expected to be offloaded.

The key question, however, is whether he can raise enough money to placate his lending banks by selling off some of his privately held cinema chain. National Amusements owns a 1,500-strong chain of multiplexes in the United States and internationally, including the Showtime chain in Britain, which has been valued at $500 million by analysts and at $1 billion by Mr Redstone, although it is not clear in the present market that a high price could be achieved.

The octogenarian has also to contend with a fraught personal life, having filed for divorce from his second wife, Paula, in October, while having a tense relationship with his daughter, Shari, who was once seen as his heir. Shari owns a fifth of National Amusements, with the rest of the company being held by Mr Redstone, and runs the cinema chain day-to-day. It is not clear how far she will agree to selling the cinemas.

Neither the Viacom nor the CBS stake is part of the refinancing plan put to the banks, but while CBS is seen as vulnerable to the economic downturn, because it is essentially a free-to-air broadcast network, Viacom continues to be regarded as a prize because of the global reach of MTV. If distressed debt investors start taking control of Mr Redstone’s borrowings, it is possible they could try to force him to consider other asset sales. CBS ’s liquid nonvoting shares fell more than 12 per cent to $5.83 yesterday. Viacom’s nonvoting stock gave up $1.69, or 9.6 per cent, to reach $15.89.

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