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Viacom Reveals Plans to Sell Rock Band Developer Harmonix

Within its third-quarter financial report, media conglomerate Viacom revealed plans to sell Harmonix, the developer behind Dance Central and the Rock Band franchise.

According to the Wall-Street Journal [subscription required], Viacom's third-quarter earnings fell 59 percent on write-downs at the developer but overall revenues and income from other operations increased more than analysts predicted.

The process of "writing-down" an asset means that Viacom willingly reduces the book value of Harmonix because it has become overvalued as compared to its own market value. In order to make this adjustment, Viacom must first reclassify Harmonix as a "discontinued operation." To prepare for this change, Viacom adjusted its third-quarter financials to already account for the sale of the developer and, in doing so, sustained a loss of $299 million.

"I am sure that the purchase price of $175 million is in there--it would have been carried on Viacom's balance sheet as goodwill," Wedbush Morgan analyst Michael Pachter told Joystiq, explaining the "discontinued operation" situation. "The rest could be other operations (non-gaming), some portion of the earn out that they paid a couple of years ago, which should have been expensed, but you never know, or some portion of the development costs for games not yet released."

Xav de Matos was previously a games journalist creating content at Shacknews.

From The Chatty
  • reply
    November 11, 2010 8:53 AM

    So what are the odds of Activision picking them up?

    • reply
      November 11, 2010 9:09 AM

      I know; kind of ominous seeing this story about a $175M selling price, right next to Black Ops making $360M. Kotick seems to be the kind of guy to go on a spite buy, cut Neversoft down even more, and force Harmonix to move out of Cambridge to Santa Monica.

      • reply
        November 11, 2010 9:12 AM

        I should add that this kind of scenario is why some places like to stay privately held if at all possible. There's not much you can do when your publically-held corporate overlord decides your company isn't worth that much, and your huge former owner is engorging themselves on brand names that almost sell themselves.

    • reply
      November 11, 2010 9:22 AM

      I figure EA will buy them.

    • reply
      November 11, 2010 10:43 AM

      I actually could see activision picking them up... just think how much more strength it would give them on the bargaining table with the music industry if they possessed all of the major music based games.. except disney's stuff.

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