Viacom is blaming a significant drop in its Q1 profits on its ongoing lawsuit with Harmonix over payments related to the Rock Band franchise. Viacom's Q1 profits amounted $212 million, down 65% from the $610 million the company earned in the same quarter last year. Viacom blames the shortfall on $383 million the company has been forced to put into reserve and charge against its quarterly earnings, based on a jointly-owned accounting firm's assessment of unpaid performance-based bonuses owed to Harmonix's founders.

Viacom is currently counter-suing former Harmonix shareholders, alleging that Viacom is owed a “refund” on earn-out bonuses already paid to Harmonix shareholders to which they are not entitled. Viacom purchased Rock Band (and Dance Central) developer Harmonix in 2006, but later sold the company back to its original founders. Shortly after, the company's founders filed suit against Viacom over alleged non-payment of performance-based bonuses promised in the original buyout agreement. Viacom refutes these allegations.

SOURCE: Viacom posts reduced Q1 profits, blames Rock Band lawsuit [Gamasutra]