|Viacom ordered to pay Harmonix an additional $383M|
|Posted: 28.12.2011 16:22 by JonahFalcon||Comments: 1|
The legal wrangling between developer Harmonix and entertainment company Viacom may have finally come to a conclusion, with the developer enjoying a windfall of cash at the end. An arbitrator has forced Viacom to cough up $383M to the Rock Band developer.
The entire saga began in 2006 when Viacom paid $175 million to acquire Harmonix, and then paid an additional $150 million in 2007. Despite Rock Band and Rock Band 2 being financially successful in those years, Viacom mismanaged the property, unable to structure costs so that it would earn a profit. The music peripheral game genre then crashed in 2009 and 2010.
It was at that point Harmonix shareholders, headed by company founders Alex Rigopulos and Eran Egozy, against Viacom, accusing them of trying to bilk them of a large percentage of the gross profit of the Rock Band series since its origins in 2007. Harmonix claimed that they were owed 3.5 times any gross profit of the Rock Band franchise over $32 million in 2007, and the same deal for profits over $45 million in 2008. To put things in perspective, the Rock Band franchise surpassed $1 billion in sales by March of 2009. According to Harmonix, that deal had no cap.
It was that this point that Viacom Harmonix for $49.99, to recoup $50M in taxes. Viacom also counter-sued Harmonix shareholders for $131M, because the publisher claimed "earn-out payments" made in its 2006 acquisition of the studio, intended to keep Harmonix management locked in after the deal was done, were miscalculated. Viacom demanded all but $19M of its original investment back.
In the end, a private arbitrator ordered Viacom to pay Harmonix's former shareholders $383M on top of a $150-million bonus payment that the entertainment company had already made. However, the shareholders had been seeking a total of $700 million, so Viacom ostensibly got out of having to pay only one half of what they could have been forced to give up.
Viacom, of course, is still not happy with the ruling, and has filed a suit in the Delaware Court of Chancery seeking to vacate the resolution accountants' decision. Their main point of contention is that certain arguments and evidence were "improperly excluded."
Source: LA Times