Digital Legal

Viacom loses in battle over Rock Band payments

By | Published on Tuesday 14 August 2012

Rock Band

MTV owner Viacom has lost a legal battle to avoid paying the original owner of ‘Rock Band’ maker Harmonix millions in bonus pay outs.

Viacom bought the gaming company and the ‘Rock Band’ franchise in 2006. In competition with ‘Guitar Hero’, the ‘Rock Band’ games seemed to do well initially, but the bubble soon burst in the pretend-to-play gaming genre, and the media conglom sold the entire Harmonix business in 2010, reportedly for less than a dollar.

But, despite the gaming brand crashing out (and reports Viacom never made a profit from the ‘Rock Band’ product), the original investors in Harmonix said they were due so called earn-out payments based on the performance of the franchise in 2007 and 2008, as agreed in the 2006 acquisition deal. Viacom, though, said nothing was owed and, in fact, they were due a refund on an initial earn-out payment that was too high with hindsight.

Both sides went legal, with all sorts of figures being bandied around – Viacom reckoned it was due $131 million, while the original Harmonix investors reportedly went as high as $700 million with their demands at one point. An arbitrator who reviewed the dispute then ruled that Viacom owed the Harmonix investors some $383 million, somewhat less than the figure they demanded, but a whole lot more than the MTV owner wanted to pay.

A settlement was eventually reached over the 2007 earn-out, but the dispute on the 2008 payment continued, and last week a court in Delaware considered the two parties’ claims, siding with the Hamonix investors who, the court reckons, are still owed $299 million.

The media firm told The Hollywood Reporter: “We are disappointed in the court’s decision, and are evaluating our options for the next steps of this process”.