Harmonix founders, ex-shareholders sue Viacom
Gamasutra reports that a group of ex-shareholders of Harmonix, including company founders Alex Rigopulos and Eran Egozy, has filed a lawsuit against Viacom. The group accuses Viacom of avoiding performance-based bonuses for the Rock Band franchise, which the company first published in 2007 after acquiring Harmonix in 2006.
Specifically, Viacom's acquisition deal stated that Harmonix shareholders would be awarded with 3.5 times any gross profit of the Rock Band franchise over $32 million in 2007, a deal that Gamasutra states had "no cap." A similar deal applied to 2008 for profits over $45 million. To put things in perspective, the Rock Band franchise surpassed $1 billion in sales by March of 2009, and that was just in North America.
The shareholder suit alleges that Viacom attempted to manipulate Harmonix's earn-out payments by negotiating a deal with EA that benefitted Viacom instead of Harmonix. Specifically, the shareholder group claims that Viacom ignored the opportunity to lower EA's distribution cost -- in effect raising potential Rock Band profits -- as part of a deal to continue distribution. Instead, the company allegedly made a deal that would see EA purchase millions in advertising from MTV, thus benefitting its parent company, Viacom.
It's evidently a pretty hairy situation, especially in light of Viacom's recent decision to sell Harmonix entirely. We've reached out to Harmonix for comment.
Specifically, Viacom's acquisition deal stated that Harmonix shareholders would be awarded with 3.5 times any gross profit of the Rock Band franchise over $32 million in 2007, a deal that Gamasutra states had "no cap." A similar deal applied to 2008 for profits over $45 million. To put things in perspective, the Rock Band franchise surpassed $1 billion in sales by March of 2009, and that was just in North America.
The shareholder suit alleges that Viacom attempted to manipulate Harmonix's earn-out payments by negotiating a deal with EA that benefitted Viacom instead of Harmonix. Specifically, the shareholder group claims that Viacom ignored the opportunity to lower EA's distribution cost -- in effect raising potential Rock Band profits -- as part of a deal to continue distribution. Instead, the company allegedly made a deal that would see EA purchase millions in advertising from MTV, thus benefitting its parent company, Viacom.
It's evidently a pretty hairy situation, especially in light of Viacom's recent decision to sell Harmonix entirely. We've reached out to Harmonix for comment.
