Activision accuses Viacom of neglecting Star Trek

[Zathras]

Activision Accuses Viacom of Neglecting `Star Trek'

 

July 1 (Bloomberg) -- Activision Inc., the exclusive maker of "Star Trek" video games, sued Paramount Pictures owner Viacom Inc., accusing it of neglecting its "Star Trek" science-fiction movie and television franchise and hurting game sales.

 

The Santa Monica, California-based game maker asked a California court for millions of dollars in damages, contending that Viacom, the third-largest U.S. media company, failed to "continue exploiting the Star Trek franchise" as required under a 10-year licensing agreement signed in 1998.

 

Paramount's "Star Trek: Nemesis," released in December, was the lowest-grossing of the 10 films in the series since 1979, taking in $43.1 million so far in North America. Audience ratings for "Enterprise," the "Star Trek" TV show on Viacom's UPN network, fell 32 percent last season. Activision claims Viacom has no plans to make more "Star Trek" movies or TV programs.

 

"A continuing pipeline of movie and television production, and related marketing, is absolutely crucial to the success of video games based on a property such as Star Trek," Activision said in its breach-of-contract suit filed yesterday in Los Angeles Superior Court.

 

Viacom didn't return calls seeking comment.

 

With several hundred new games released each year, publishers such as Activision rely on tie-ins with films and TV shows to win space on store shelves and capture the attention of consumers in what increasingly has become a hit-driven business.

 

"Harry Potter and the Chamber of Secrets," a game based on the hit children's novel, was one of Electronic Arts Inc.'s best sellers last year, for example, while Activision's "Spider-Man" benefited from Sony Corp.'s blockbuster movie of the same name.

 

Licensing Fees

 

Activision said in the suit that it has paid more than $11 million in licensing fees to Viacom. The 10-year contract requires Activision to pay New York-based Viacom a total of $20 million in guaranteed licensing fees.

 

Activision also granted Viacom warrants to buy "hundreds of thousands" of Activision shares, according to the suit. Viacom has exercised some of the warrants, generating more than $10 million in additional revenue for Viacom, the suit said.

 

George Rose, Activision's senior vice president of business affairs, said the company wouldn't comment on the lawsuit.

 

Activision shares rose 3 cents to $12.90 at 2:35 p.m. New York time on the Nasdaq Stock Market. They've fallen 30 percent in the past year.

 

Viacom's Class B shares fell 47 cents to $43.19 in New York Stock Exchange composite trading. They've risen 4.2 percent in the past year.

 

Activision, whose other games include "Tony Hawk's Pro Skater" and "X2 Wolverine's Revenge," released only one new title in the most recent fiscal quarter and reported its first loss in more than two years. It released a new Star Trek game, "Star Trek: Elite Force 2," last week, the company said.

 

"Viacom, through its actions and inactions, has let the once proud Star Trek franchise stagnate and decay," Activision said in the suit

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