Viacom Asking For ‘Substantial’ Refund on Harmonix Earnout From Founders

Viacom (NYSE: VIA), which has seen sales of its Rock Band franchise slow amid the gaming slump, is asking for a refund on its 2007 earnout payment to the Harmonix founders, according to a company 10-K filed earlier today. In October 2006, Harmonix, developer of the Rock Band franchise, was bought by MTV Networks for $175 million plus earnouts based on its performance in 2007 and 2008. Viacom did a payment of $150 million to the Harmonix shareholders related to 2007 performance, but now it says that “we believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of the earn-out has not yet been determined.”

While Rock Band has generated more than a $1 billion in revenue since it was released in late 2007, its sales have dropped over the last year. Just today, the company said its quarterly results were hit by lower sales of the franchise. During its earnings call, Viacom attributed the fall off to “a challenging year for video games in general” and said it was focusing on reducing costs associated with Rock Band.