YouTube & Video

Viacom Sues Former Shareholders Of Rock Band Creators Harmonix Demanding $130 Million

Rock-band In late December of 2010, former shareholders of Harmonix Music Systems, creators of the Rock Band music game, sued Viacom for what they claimed were attempts to sneak out of paying performance earn-outs specified in Viacom's acquisition of Harmonix. Now Viacom has struck back with a lawsuit filed on Friday in Delaware demanding repayment of over $130 million of the initial earn-out from 2007.

Verified Complaint

Copy of Lawsuit Obtained by Hollywood Reporter

On Monday, The Hollywood Reporter revealed that Viacom filed a lawsuit in Delaware for $131,827,980 of a $149,770,149 payment made to Harmonix Music Systems in an earn-out agreement resulting from Viacom's 2006 acquisition of Harmonix.

According to Gama Sutra the earn-out agreement, based on sales of the once popular Rock Band music game, specified payments for 2007 and 2008 but the only payment made was for 2007. In December 2010, former shareholders of Harmonix sued Viacom, alleging that the company had manipulated deals with Rock Band distributer Electronic Arts to reduce possible earn-out payments to ex-shareholders.

However, Viacom also sold Harmonix to an investment group in December for $50 and the assumption of liabilities and inventory. Since then the issue of the earn-out has been under arbitration.

Now Viacom wants most of their earn-out payment back, saying it was miscalculated, and so the lawsuit against former Harmonix shareholders is now in play.

Confused? Me too. I hope I got the details right but this reminds me of a lesson I learned long ago. When big businesses expect to lose money, one of their favorite tactics for reducing loss is to sue and, as we all know, the lawyers come out the winners.

Hypebot contributor Clyde Smith is a freelance writer and blogger. He blogs about web business models at Flux Research and the world of dance at All World Dance. To suggest music services and related topics for review at Hypebot, please contact: clyde(at)fluxresearch(dot)com.

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