December 24, 2010

Harmonix Sold By Viacom

Harmonix Music Systems, the developer behind the Rock Band franchise, has been sold by owner Viacom Inc, to the investment firm Columbus Nova and earned an estimated $200 million in the deal, ending a failed venture in the lucrative video game business.

Analysts have questioned the value of Rock Band for some time, especially for a company better known for cable networks MTV and Nickelodeon and film company Paramount Pictures. Viacom said in November it would be selling the video game franchise.

Harmonix-SBE Holdings LLC, an affiliate of Columbus Nova LLC, will take hold of the asset, Viacom told Reuters in a statement made Thursday. Neither side disclosed the terms of the sale.

"It's probably a small net positive, but it shouldn't be a major driver to the stock," Alan Gould, an analyst for Evercore Partners, told Reuters.

The deal is expected to be worth between 100 and 200 million dollars to Viacom, in large part from tax benefits and the buyer's assumption of liabilities such as write-downs on holiday sales, James Dix, an analyst for Wedbush Securities, told Reuter's reporter Alex Dobuzinskis.

The net loss to Viacom from discontinued operations for the nine months ending September 30 was $316 million, according to financial records.

Viacom had high hopes for the launch of Rock Band's "The Beatles" game in 2009, but Gould said that "didn't do anywhere near the kind of business they thought it was going to do."

Columbus Nova, which created Harmonix-SBE Holdings to hold the asset, is a multi-strategy investment firm managing over $10 billion in assets through its own funds and affiliated portfolios.

"Columbus Nova is really excited about backing the world-class team that has consistently produced such great games and helping them grow the company and its brands," a company spokesperson said in a statement.

Viacom shares were down half a percent to $39.21 in mid-afternoon trading on the NYSE on Thursday.


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