The media giant has been ordered to pay an additional $383 million to Boston-based Harmonix, the original makers of Rock Band (Rock band, sequels Rock Band 2 and 3, and spin-off The Beatles: Rock Band). It’s the latest drama surrounding Viacom’s failed attempt to enter the video game biz. In a regulatory filing, Viacom said a private arbitrator ordered it to pay Harmonix’s former shareholders the money on top of a $150 million bonus payment it previously made. The shareholders had been seeking a total of $700 million, or $167 million more than the arbitration accountants determined.
The issue surrounds bonus payments owed to Harmonix’s former owners under the terms of the 2006 acquisition by Viacom, which paid $175 million as a down payment. Viacom then paid a $150 million bonus for sales of Rock Band in 2007 but made no payment in 2008 and then sought a refund of nearly all the money it paid up to that point.
Though Rock band and its sequels sold more than 10 million units, Viacom consistently lost money because of the high cost of creating plastic instrument controllers, reported The LA Times. In late 2010, it sold Harmonix to a New York private investment firm for just $50 and received a tax benefit of about $50 million on the loss.
About then, the original shareholders of Harmonix filed a suit alleging they should not only be allowed to keep the original $150 million bonus but were also owed an additional $550 million. The suit triggered the arbitration.
Viacom is not accepting the decision as a done deal, however, said the story. It filed a suit in the Delaware Court of Chancery seeking to vacate the resolution accountants’ decision because certain arguments and evidence were “improperly excluded.”
