MTV To Acquire Harmonix Music

The network is expanding online as the network faces increasing competition from YouTube and MySpace.

MTV Networks on Friday said it has agreed to acquire Harmonix Music Systems for $175 million in cash, the latest expansion in the music cable network's online presence.

Harmonix, a Cambridge, Mass., maker of music-themed videogames, is the developer of "Guitar Hero," a popular game for the Sony PlayStation. MTV, a division of entertainment giant Viacom, had formed a partnership with Harmonix late last year to feature the game in original programming and promotions.

"The acquisition of Harmonix will deepen MTV's connection to its audience via online, 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," Christina Norman, president of MTV, said in a statement.

MTV is expanding online as the network faces increasing competition from YouTube and MySpace, fast-growing social networking sites that attract MTV's core audience of teenagers and young adults. The network this year joined Microsoft in launching an online music service called Urge. In August, MTV bought Atom Entertainment, which offers online games, short films and video, for $200 million.

Under the latest deal, Harmonix shareholders would be eligible for earn-out payments through 2008, if predefined financial results are met. Alex Rigopulos would continue as chief executive of Harmonix, New York-based MTV said. The acquisition is expected to be completed in the fourth quarter.

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