UPDATE: Now sources are telling me these first round auction bids are pretty much meaningless. The bids are non-binding so there is no downside to bidding high to be allowed enter the next round(. Bidding low only gets you thrown out of the process.) Without the New England theatres included, the auction was “not very compelling,” one insider tells me. “Even with them now included, Sumner Redstone’s ‘ask’ prices are too high and he’s not going to get the premium prices that the sell side bankers are talking about. Not in this economy (irrespective of box office performance).”

6:30 PM: No wonder I heard last week that Sumner Redstone’s holding company National Amusements was pleased with the bauctions. Now sources are telling me and other journalists that the first round of bids for U.S. and UK movie theater properties are hefty enough to allow Sumner to pay off his debt obligations due in 2009. At least 10 parties have bid in each auction. At first the U.S. auction excluded the New England theaters, but then it was expanded to include most of them. Bidders for the U.S. properties are mostly competitors and private equity firms. National Amusements operates 1,500 motion picture screens in the U.S., UK, South America, and Russia.

One auction is for 68 theaters in the United States and the other sale is for 21 theaters in the United Kingdom. Citigroup, which is handling both, sent out sales books to 60 parties for the domestic theaters, and to 20 parties for the overseas theaters.

The 85-year-old Viacom chief still has a $1.4 billion balance left on his original $1.6B loan, some of which has to be paid back by the end of this year, and all in 2010. This crisis began back in October when Viacom and CBS share prices dropped 43% and 52% respectively, causing the old coot to sell stock in both companies worth $233 million. The falling prices put Redstone in violation of debt covenants, forcing him into negotiations with creditors.