MTV- Harmonix merger: A Digital Expansion Move

In the latest move to expand its digital base, MTV Networks (MTVN), a division of Viacom Inc. is all set to acquire Harmonix Music Systems Inc. for a cash deal worth 175 million US dollars.

MTV is one of the world's leading creators of programming and content across all media platforms. It has more than 130 channels worldwide. It owns and operates a package of 13 digital services like MTV Music Television, MTV2, VH1, etc. all under the trademark of MTV Networks.

Harmonix, a developer that specializes in music-based video games has to its credit PlayStation 2 hit Guitar Hero and the Karaoke Revolution apart from other successful music gaming titles.

The acquisition of Harmonix demonstrates MTV's commitment to music and furthers its strategy of engaging passionate music fans through a deep and immersive multi-platform entertainment experience.

MTV hopes that with the addition of strong music gaming titles from Harmonix to its arena, the music-based universe of entertainment, news, gaming, and interactive content offerings are likely to enhance.

MTV President, Christina Norman said, “The acquisition of Harmonix will deepen MTV's connection to its audience via on-line, mobile and console music gaming, and expand the relationship with both labels and artists through the creation of games based on classic songs as well as future album releases.”

After the MTV-Harmonix merger, the total amount spent on video game acquisitions this year by MTV Networks, sums to $577 million. This includes the $200 million for Atom Entertainment in August and $102 million for Xfire in May takeovers.

Under the terms of the transaction, MTV Networks will acquire the outstanding stock of Harmonix. Also, Harmonix shareholders may be eligible for incremental earn-out payments through 2008, to the extent that financial results exceed specific targets.