Bankruptcy becomes reality for media and entertainment industry companies

On Thursday, Cable operator Charter Communications along with video game publisher Midway Games both filed for bankruptcy.

According to HollywoodReporter.com, "Amid a high debt load, the deepening recession and a continuing credit crunch, the companies join media firm Tribune, which made a bankruptcy filing in early December, on the list of those seeking protection."

Charter and Midway aren't the only companies being forced into bankruptcy. Sirius XM Satellite Radio is also floating over the notion of bankruptcy because of a debt repayment due next week.

As for Charter, its Chapter 11 bankruptcy filing will commence on April 1. In addition, in an effort to decrease their hefty debt, Charter disclosed an agreement-in-principle with some of its debt holders on a financial restructuring that will reduce the cable operator's debt by about $8 billion.

The HollywoodReporter.com article also mentioned, "As part of the agreement, current chairman [Paul] Allen will continue to retain the largest voting interest, if not the largest economic stake, in the company, Charter said without providing further details. Sources said he'll control a voting stake of about 35%, down from more than 90% in the past. His economic stake will be smaller."

As for Midway Games Chapter 11 filing, it is being considered as fallout from media mogul Summer Redstone's decision to sell his majority stake in the company which resulted in a substantial loss.

Unfortunately, both Charter and Midway's shares plummeted by Thursday. Charter shares nose-dived by 48 percent to less than 4 cents. Meanwhile, Midway shares plunged 36 percent to 16 cents.

Hal Vogel, president of Vogel Capital Management, blames this unsettling string of bankruptcies on the floundering economic times, "But these were overleveraged companies to begin with and would have been in trouble even in the good times of three years ago."