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Activision Sues Viacom Over Star Trek Game License

by Rainier on July 1, 2003 @ 8:45 a.m. PDT

Activision Inc. filed a breach of contract suit alleging media giant Viacom Inc. isn't adequately exploiting the Star Trek franchise, thereby diminishing the value of the video game developer's license to produce Star Trek-themed games. In 1998, Activision entered a 10-year licensing arrangement with Viacom that gave it exclusive rights to produce Star Trek titles across all gaming platforms.

Since then, Activision said Viacom has only produced one new Star Trek movie, with no immediate plans to make others, and allowed two Star Trek television shows to go off the air, while the ratings of a third lag.

Viacom representatives were not immediately available for comment.

In a press release Tuesday, Activision it has terminated its agreement with Viacom, and is now seeking damages from Viacom, alleging the media company " significantly diminished the value of Star Trek licensing rights including the rights received by Activision."

An Activision spokeswoman said the initial license agreement included $20 million in advance royalties and warrants, with additional payments to be based on game sales. She wouldn't comment on the amount of damages the company is seeking in the suit.

Activision doesn't expect termination of the license or the filing to have a material effect on its first-quarter and full-year financial outlook.

The company has previously said it expects a loss of 1 cent a share in the first quarter and earnings of 70 cents a share in the fiscal year.

Analysts surveyed by Thomson First Call expect the company to break even in the first quarter and earn 48 cents a share in fiscal 2004.

In the fiscal year ended March 31, Activision earned 31 cents a share in the first quarter and 96 cents a share for the full year.

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