Viacom loses Harmonix lawsuit, must pay $299M disputed bonuses

The Delaware Supreme Court ruled against Viacom yesterday in the company's years-long court dispute with Harmonix over bonus payments, and the media conglomerate must now pay the $299 million it owes to the studio's former stockholders.

Yesterday's decision in the case, Viacom v. Winshall — the defendant represents Harmonix's former stockholders — affirms prior judgments against Viacom from an arbitrator in 2011 and a lower court in 2012. Viacom had appealed the lower court's decision to the state supreme court. The company maintained all along that the arbitration agency failed to consider certain evidence, and that it lacked the authority to rule that a particular issue in the case could be decided by an arbiter rather than a court.

The higher court dismissed both claims yesterday. Unless Viacom appeals the decision to the U.S. Supreme Court, or the ruling is reconsidered, it will stand.

MTV Networks, a subsidiary of Viacom, purchased Harmonix in September 2006 for $175 million, and Viacom ended up selling the studio in December 2010. The terms of the acquisition included "earn-out" payments to be made to Harmonix's former stockholders, depending on the studio's performance in 2007 and 2008.

Viacom paid Harmonix bonuses of $150 million in 2007, but determined that it owed the stockholders nothing in 2008 and later sought a refund of its earlier payment. Walter Winshall, the stockholders' representative, disputed the calculation, and the companies went to an arbitration agency, which decided in December 2011 that Viacom owed Harmonix an additional $383 million. Viacom agreed to pay $84 million of that amount to settle the 2007 bonuses, but the companies went to court over the remaining $299 million for 2008's payouts.

A Harmonix representative told Polygon the studio has no comment on the ruling. We've also reached out to Viacom for comment, and will update this article with any response we receive.

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