Accounting Firm Says Viacom Owes Harmonix $383 Million

December 28, 2011 -

According to an accountant jointly appointed by both Viacom and former (major) shareholders of Harmonix, the former parent company of the Rock Band series makers owes in excess of $383 million. The details of the audit were revealed last week, according to this Gamasutra report.

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 legal battle is related to the 2006 deal that saw Viacom acquiring Boston-based Harmonix shortly after the success of its 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.

For 2007, Viacom was supposed to pay shareholders 3.5 times any gross profit made over $32 million during the year. For 2008, it was supposed to pay 3.5 times anything over $45 million. But the only earn-out money to come from Viacom was a $150 million payment in 2007 in anticipation of that year's profits. The company now claims that the sum was based on a "preliminary calculation." According to Viacom's lawsuit filed in September, the calculation was not accurate, and the amount owed for both 2007 and 2008 combined was a mere $18 million.

If BDO's figures are certified by the court, the total purchase price of Harmonix would come to right around $708 million, which includes the initial $175 million purchase price, a $150 million earn-out payment that was already received, and the additional $383 million that it allegedly owes.

Source: Gamasutra

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