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Warner Brothers Bids for Midway Games Assets

Warner Bros. Entertainment Inc. has made a $33 million bid for the majority of U.S. assets held by "Mortal Kombat" video game franchise owner Midway Games Inc., which filed for bankruptcy earlier this year.

Warner Brothers
CNBC.com
Warner Brothers

The companies said Thursday they have a "stalking horse" agreement, essentially the opening bid in a court-supervised auction for the company's assets,

The deal would not include the entire company. Burbank, Calif.-based Warner Bros., a subsidiary of Time Warner Inc., would take over Midway's development studios in Chicago and Seattle along with the "Mortal Kombat" line, but not studios in San Diego or Newcastle, Britain.

Midway filed for bankruptcy in February after media mogul Sumner Redstone sold off his majority stake in the company, leaving it unable to meet debt obligations.

The company had already been struggling, saying in December it would lay of 25 percent of its work force, or about 180 people, and close a studio in Austin, Texas.

Time Warner shares fell 54 cents, or 2.3 percent, to $22.97 in afternoon trading Thursday.