Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
August 29, 2014
arrowPress Releases
August 29, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


Viacom Owes Former Harmonix Shareholders $383M, Says Accountant
Viacom Owes Former Harmonix Shareholders $383M, Says Accountant
December 27, 2011 | By Frank Cifaldi

December 27, 2011 | By Frank Cifaldi
Comments
    2 comments
More: Console/PC, Business/Marketing



The ongoing "who owes who" fight between former shareholders of Rock Band developer Harmonix and former parent company Viacom took a significant turn last week when a jointly-appointed accountant found the latter owing in excess of $383 million.

The findings should throw a wrench in Viacom's recently-filed lawsuit, which claims the former shareholders -- which include Harmonix founders Alex Rigopulos and Eran Egozy, among others -- actually owe Viacom a $131 million dollar refund due to a miscalculation.

On Tuesday, Viacom filed suit in a Delaware court asking that the accounting firm, BDO USA, "consider arguments and evidence that were improperly excluded" from its report, saying that its figures resulted from "manifest error."

The ongoing dispute stems from a 2006 deal that saw Viacom acquiring the studio soon after the success of its initial Guitar Hero games. Under the terms of the agreement, Viacom paid Harmonix's shareholders an initial sum of $175 million in September 2006, with the promise of bonus earn-outs dependent on the studio's performance in 2007 and 2008.

Those bonuses worked like this: for 2007, Viacom would pay the shareholders 3.5 times any gross profit made over $32 million during the year. For 2008, it would pay 3.5 times anything over $45 million, potentially putting itself on the line for hundreds of millions of dollars based on the success of the company's Rock Band games.

The only earn-out money to come from Viacom to date was a nearly $150 million payment in 2007 in anticipation of that year's profits, a sum the company claims was based on a "preliminary calculation." According to Viacom's lawsuit filed in September of this year, that calculation was incorrect, and the amount owed for both 2007 and 2008 combined was just $18 million.

As Gamasutra exclusively revealed last year, the former Harmonix shareholders filed suit against Viacom seeking what it considered the remainder of its performance-based bonuses. BDO was hired at that time as a mutually-agreed-upon "resolution accountant" by both sides.

If Viacom's appeal is thrown out and BDO's figures are honored, the total purchase price of Harmonix would equate to around $708 million dollars, adding together the initial $175 million purchase price, the $150 million earn-out payment already received, and the additional $383 million it is alleged to owe.

Harmonix is no longer owned by Viacom: the company was offloaded for just under $50 earlier this year, though its new owner also inherited debts that included music rights fees and remaining warehouse inventory of games and plastic instruments.

Viacom did not immediately respond to Gamasutra's request for clarification on what BDO's report failed to address, but this story will be updated as new information is obtained.


Related Jobs

AtomJack
AtomJack — Seattle, Washington, United States
[08.29.14]

Level Designer
Insomniac Games
Insomniac Games — Burbank , California, United States
[08.29.14]

Senior Engine Programmer
Insomniac Games
Insomniac Games — Burbank, California, United States
[08.29.14]

Gameplay Programmer - Mobile
Churchill Navigation
Churchill Navigation — Boulder, Colorado, United States
[08.29.14]

3D Application Programmer










Comments


Simas Oliveira
profile image
Ouch. Talk about backfire.

Alan Rimkeit
profile image
Karma always comes to get you someday.


none
 
Comment: