Midway (MWY) blames its unfortunate situation on Sumner Redstone’s decision to sell National Amusement’s majority stake in the company in December. That change in ownership has apparently allowed him to make “substantial progress” on restructuring National Amusements’ debt, as Redstone said this morning. But it was disastrous for Midway as evidenced by today’s announcement.

“This was a difficult but necessary decision,” Matt Booty, Midway’s president, chairman and CEO, said in a statement. “We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure. Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth-quarter sales that exceeded expectations in spite of a challenging retail and general economic environment.”

Apparently, Booty wrote that last line without a hint of irony. But clearly it’s soaked through with it. Fact is, Midway hasn’t had a profitable year in nearly a decade. And given the somber outlooks of far more potent rivals like Electronic Arts (ERTS) and Take-Two (TTWO), and its anemic game catalog, this year will be no different.

The Wall Street Journal reports that Redstone’s National Amusements holding company has sold its 87 percent stake in Midway (MWY) for $100,000, plus the assumption of $70 million in debt, to Thomas. On Friday, that stake was worth something like $30 million.

The real upside for Redstone, the paper says, will be a tax loss of some $800 million, though it’s unclear how he will be able to use that to help restructure his debt. Over the years, Redstone invested an estimated $500 million in the game maker. Redstone still has a few other assets that aren’t CBS (CBS) or Viacom (VIA), but those are by far his most valuable properties.

What does Thomas get out of this? It’s not entirely clear. Midway is best known for its “Mortal Kombat” franchise, which was once considered controversial because it allowed players to rip out the still-beating hearts of their opponents. But that’s old hat these days, and even new iterations like “Mortal Kombat vs. DC Universe” haven’t been able to sustain the company, which has lost $494 million in the last five years and has been under constant threat of losing its NYSE listing in recent months.

In a research note earlier today, Pali Research analyst Richard Greenfield noted that the combination of the declining value of National’s public holdings and “unfriendly credit markets” are going to force Redstone to take action. Greenfield thinks his best move would be to put Viacom (VIA) up for sale, but that Redstone isn’t likely to allow that.

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This should be a good place to gauge the state of the industry, but it’s also a dizzying one: There are a couple hundred booths and dozens of panels to navigate. So MediaMemo asked an ad:tech veteran for a guide: Mike Lazerow, whose Buddy Media specializes in getting big brands to advertise on social networks like Facebook and News Corp.’s (NWS) MySpace.

Lazerow’s first suggestion was to catch CNN president Jon Klein’s keynote this morning. But voting lines nixed that idea (suggestion for next time–Brooklyn district 91 needs more voting machines). Other highlights from Lazerow’s itinerary:

Another must-see keynote is the ‘state of the industry’ on Tuesday, moderated by Internet Advertising Bureau chief Randall Rothenberg. I usually stay away from any panel featuring five people with giant titles on the same stage together. But Randall is an uber-sharp strategist and thought-leader and promises to lead a compelling panel discussion that aims to cut through the noise of the digital marketing world.

… By far the most compelling Data panel is Wednesday’s ‘The Future of Measurement–How Do We Define the New Media Currency?’ David Hallerman, a senior analyst at eMarketer, hosts leaders of the major metrics firms, Nielsen Online, Hitwise, comScore, Quantcast and Microsoft’s Analytics and Atlas Institute. The focus of the panel will be how to create universal metrics to gauge the success and determine the pricing of all digital media that Google doesn’t hold a claim to. I encourage the panelists to grab a drink with each other afterward to move closer to common metrics. …

The ad network panel that will be most interesting is Thursday’s late-afternoon session ‘So Many Networks, So Little Time: Analyzing the Digital Network Landscape,’ hosted by David Joseph, head of the interactive entertainment research group at Morgan Stanley.

The real title of the panel should be ‘Online Ad Networks: Why There Are Too Many and Why They Will Be Out of Business Soon.’ While the world wants another ad network as much as I want my third heart surgery, these buy-siders will help sift through the confusion of the already over-crowded ad network space.

… For the most part, avoid all panels that have ‘innovation,’ ‘synergy’ and ‘dispatches from’ in the title. Stick with panels featuring companies that HAVE money (agencies, brands) and not companies that are selling solutions (startups, vendors and the major ad networks and sites). What matters is what the brands and agencies are buying, not what we want to sell them!”

And yes, Lazerow is on a panel himself: “Mobilizing and Leveraging Consumer Insights: Best Practices for the Digital and Social Media Age” kicks off at 2:45 p.m., and he assures me the discussion will be more interesting than the name. See you there.

Redstone altered the standard introduction he makes at the beginning of each quarterly earnings call to address his recent sale of $233 million worth of shares in CBS (CBS) and Viacom (VIA). Those sales, made to appease lenders to Redstone’s National Amusements Inc. holding company, were a one-time event, he insisted: “This was not something NAI wanted to do, nor is it something that NAI intends to do again … NAI has no intention of selling a single share of Viacom or CBS.”

National Amusements, which is both a movie theater operator and Redstone’s personal holding company, is  trying to renegotiate some $1.6 billion in loans. A debt covenant triggered the share sales earlier this month, and investors have been wondering whether Redstone will have to unload even more shares.

CBS shares are down more 50 percent over the last year, and Viacom’s price has dropped nearly 70 percent.

Note that Redstone couldn’t definitively promise that he wouldn’t sell another share in his companies. And CBS officials wouldn’t let analysts ask him about his debt issues during the conference call.

National Amusements President Shari Redstone took similar issue with Comcast’s plan and also vowed not to show any movies that are simultaneously released on cable TV. “It’s the smart thing to do,” she said. “Movies were meant to be seen in the movie theater. … If people do the right thing, you’ll have exhibitors not playing the movies, and studios not doing business with Comcast.” Redstone added that day-and-date video-on-demand distribution of the sort Comcast proposes will ruin a film’s “wow” factor. “What really made the [movie] industry work is when you released a movie in the theater, there was a wow factor,” she said. “As you begin to shrink the window, you take away from that wow factor, and what happens is that people who used to end up seeing a movie a few times, see it once.”

Pardon me for saying it, but “wow” that’s a ridiculous statement given today’s moviegoing experience.