CBS Corp.'s not-so undercover boss, Leslie Moonves, was awarded a total compensation package of $43.2 million for 2009, according to regulatory filings released Friday.

The amount includes $3.5 million in base salary plus a $15-million bonus. The 60-year-old chief executive also received stock worth $7.6 million and stock options that are presently worth about $14.3 million. 

Moonves' total package for 2009 was more than double what he was awarded in 2008 when the company's stock dropped precipitously. In 2008, the package was $21.2 million. No stock options were granted that year.

CBS defended Moonves' compensation.

"More than 85% of Mr. Moonves' compensation is keyed to performance-based measures, ensuring that its actual value will continue to be closely aligned with that of the company's shareholders," the company said in a statement.

CBS' controlling shareholder and chairman, Sumner Redstone, collected $16.2 million for 2009.  Redstone, who turns 87 next month, garnered an additional $16.8 million in total compensation for his role as chairman of his other company, Viacom Inc., according to a separate filing.  Between the two companies, Redstone collected a total of $33 million in compensation.

Viacom Chief Executive Philippe Dauman's total compensation for 2009 was slightly more: he was awarded a total package of $34 million.

-- Meg James

Photo:  Leslie Moonves  Credit: John Filo / CBS

There is much to behold in the 300-plus pages released Thursday morning in the $1-billion copyright infringement lawsuit that Viacom has lobbed against YouTube and its parent company, Google.

Among the more juicy tidbits is a set of internal Viacom documents from July 2006 showing that the New York media conglomerate had explored buying YouTube for as little as $1 million. The talks foundered, and YouTube was subsequently acquired by Google in October 2006 for $1.8 billion.

In one e-mail dated July 9, 2006, Adam Cahan, who at the time was MTV's executive vice president of strategy and business development, wrote "we all believe this is a transformative acquisition that we should pursue," citing YouTube's rising traffic and its value in "moving beyond social sharing of video into a utility for video search more broadly."

The next day, however, things seemed to turn sour. In an e-mail exchange between MTV Networks President Van Toffler and MTV President Judy McGrath, Toffler asked McGrath, "We buying YouTube?"

McGrath replied, "Probably not buying YouTube, if I had to wager." When Toffler asked why, she seemed to express frustration with Viacom's executive ranks and inability to strike quickly. "Because it's our ... company," she wrote. She then added that she was having dinner that night with Viacom Chief Executive Sumner Redstone and suggested that he should "stop running the company for wall street."

Toffler wrote back, "I do think some of it cuts to the bone. What happened to our what the ... ways. It takes 3 months and 58 meetings to get a 1 million dollar acquisition done at our company. We're fast becoming those we scorned."

-- Alex Pham

MTV Networks President Judy McGrath. Credit: Viacom.

Let the spinning begin. Once-sealed court documents related to Viacom's $1-billion copyright infringement lawsuit against YouTube landed in public view Thursday.

As expected, the documents, released by court order, highlight fundamental differences over the responsibility of social networks in monitoring user-uploaded content.

Viacom's brief argued that YouTube knew that pirated videos had been uploaded to its site and sought to profit from the piracy since its inception in 2005.

In its motion for summary judgment, Viacom claimed that YouTube hid "behind a policy of willful blindness and seek to shift responsibility to clean up their site to victimized content owners like Viacom. Under both common and statutory law, the answer is clear: Defendants are liable for the rampant infringement they have fostered and profited from on YouTube."

YouTube, acquired by Google in 2006 for $1.8 billion, argued Viacom's accusations were baseless and that it had acted responsibly by removing infringing videos and later developed software tools to automatically identify and take down pirated videos. The San Bruno, Calif., company posted its statement on the case here.

YouTube also came out slugging, alleging that Viacom was responsible for uploading much of its own shows to YouTube. Here's the money quote from YouTube:

For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately "roughed up" the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko's to upload clips from computers that couldn't be traced to Viacom.

We will continually update this post as we make our way through the court briefs.

-- Alex Pham

Viacom Inc. has decided it gave a little bit too much help to its friends at video game developer Harmonix Music Systems.

After losing money for the third consecutive year on its Rock Band video games produced by Harmonix, Viacom is moving to take back a "substantial portion" of a $150-million bonus it paid in 2008 to the company's former owners.

Viacom waded into the music video game business in 2006 by paying $175 million to buy Harmonix, which leaped from obscurity by producing the first Guitar Hero game. After Harmonix developed Rock Band for its new owners in 2007, Viacom paid the studio's former shareholders a $150-million "earn-out" bonus based on its performance.

In a Securities and Exchange Commission filing Thursday, Viacom said it now wants much of that money back.

"At December 31, 2009, we believe that we are entitled to a refund of a substantial portion of amounts previously paid, but the final amount of the earn-out has not yet been determined," the company said in the filing.

A spokesman for Viacom declined to elaborate. Harmonix Chief Executive Alex Rigopulos referred questions to a spokesman, who also declined to comment.

With sales for the high-profile release The Beatles: Rock Band coming in at an underwhelming 1.7 million units worldwide last year, the music game series dragged down profit for Viacom's MTV Networks division by 4 percentage points, the conglomerate's chief financial officer, Tom Dooley, said on a conference call with analysts after the release of its quarterly earnings report Thursday.

In a research note, media analyst Michael Nathanson of Bernstein Research estimated that the "current trend" of losses for Rock Band has been between $50 million and $100 million per year.

Before the release of The Beatles: Rock Band in August, MTV Games general manager Scott Guthrie said he expected the company's video game business to be profitable in the fourth quarter.

"It certainly was a challenging year in 2009, you know, for the video game industry in general and certainly for our Rock Band franchise," Viacom Chief Executive Philippe Dauman said on the conference call.

Also this week, game publisher Electronic Arts revealed that its deal to distribute Rock Band games for MTV would expire soon and that it was planning to cut back on handling games for other companies. An upcoming version of Rock Band featuring Green Day will be the last title released under the current deal.

"We are in discussions to evaluate future distribution relationships," Dooley said on the call.

Viacom isn't the only company having trouble in the music video game business. Activision said in its quarterly earnings report Wednesday that it sold 35% fewer Guitar Hero-related titles last quarter than a year earlier.

Activision said it would release just 10 versions of its music games this year, down from 29 in 2009.

The Santa Monica game company, which laid off about 200 employees Thursday, is hunkering down and focusing on games for the hard-core players willing to spend their bottom dollar on games.

Mike Griffith, head of Activision’s publishing business, summed it up during a conference call with investors by saying, “In 2010 we’re anticipating further declines in the music genre overall as the casual consumer proves less robust.”  

[Corrected at 3:16 p.m.: An earlier version of this post said that after Harmonix developed Rock Band for its new owners in 2007, Viacom paid a $150-million "earn-out" bonus to the studio's principals.The principals constituted a minority group of the former shareholders.]

-- Ben Fritz

Times staff writer Alex Pham contributed to this report.

Image: The Beatles: Rock Band. Credit: MT V Games

Media giant Viacom Inc.'s fourth-quarter operating income surged because of cost-cutting and because longtime earnings laggard Paramount Pictures turned a tidy profit.

Results for the quarter ended Dec. 31 were buoyed by the over-the-moon box-office results of "Paranormal Activity" and strong home-video sales of Paramount's summer tent-pole hits "Transformers: Revenge of the Fallen" and "Star Trek."  Profits increased $214 million for the filmed entertainment division.

"This is the highest profitability the film studio has generated in seven years," Viacom Chief Financial Officer Thomas Dooley said Thursday in an early-morning conference call with Wall Street analysts.

Viacom also said it had bought back the DreamWorks SKG film library from investor George Soros for $400 million.

Overall, the company generated earnings of $694 million, or $1.14 per share, for the fourth quarter of 2009.  That compared with $173 million, or 28 cents per share, for the previous year. The increase was fueled, in large part, because of a charge of $454 million in December 2008 because of massive layoffs.

The results beat the estimates by analysts. 

Revenue at Viacom dipped 3% to $4.1 billion for the quarter, reflecting continued weakness in the television advertising market. Viacom owns MTV, VH-1, Nickelodeon, Comedy Central and BET.

Viacom's "Rock Band" video-game franchise continued to produce sour notes. "It certainly was a challenging year in 2009," Viacom Chief Executive Officer Philippe Dauman said of the game's performance. 

The company's movie channel start-up, Epix, has experienced some good news recently with two major cable operators, Cox and Charter Communications, agreeing to distribute the channel later this spring. "As we ramp up the distribution, revenues will start coming in," Dauman said. He said the channel, a joint venture with Lionsgate and Metro-Goldwyn-Mayer, should break even next year.  

-- Meg James

Sales of The Beatles: Rock Band game during the holidays turned out to be less than fab.

The costly music game sold 357,000 units in the U.S. in December, bringing its total since launching Sept. 9 of last year to 1.18 million, according to new data from the NPD Group.

Including foreign sales, The Beatles: Rock Band sold more than 1.7 million units worldwide.

In contrast, 2008's Rock Band 2, which was significantly less expensive to produce, sold 1.7 million units in the U.S. alone in its first four months.

Scott Guthrie, executive vice president of Viacom's MTV Games unit, said he was pleased with the holiday sales, though he noted that some European markets performed below the company's expectations. 

He said that while overall sales were down, profit margins on the Beatles game could be higher than for Rock Band 2 because fewer people bought instrument controllers, on which Viacom was losing money, and more bought the game by itself. Guthrie also noted that players purchased more than 1 million Beatles song downloads to play in the game.

Viacom, the owner of Paramount Pictures and MTV Networks, guaranteed at last $10 million to various Beatles rights holders, including Paul McCartney, Ringo Starr, the estates of John Lennon and George Harrison, EMI Music and Sony/ATV Music Publishing, in order to produce and promote the game.

The Beatles: Rock Band debuted with a solid 595,000 units sold in its first month. At the time, Guthrie said he expected a strong boost over the holidays as MTV invested in marketing in November and December aimed at Beatles fans who weren't experienced gamers.

Viacom had hoped that the Beatles game would help bring its Rock Band franchise, which has consistently lost money over the last two years, into the black. Guthrie declined to comment on financial specifics before Viacom's next earnings report, but said his division was "turning the corner" toward profitability.

The Beatles: Rock Band was far from the only music video game to experience disappointing sales last year. Activision's Guitar Hero 5 sold only 996,000 units. By contrast, 2008's Guitar Hero: World Tour sold 3.4 million.

Overall, sales of music video games plunged 46% to $1.06 billion last year, according to NPD. It was the largest decline of any genre, indicating that the once red-hot music gaming trend, which took off with the original Guitar Hero in 2005, is losing steam. Part of that drop, however, is because in 2008 more music games were sold with pricey instrument controllers than last year.

For more on overall sales figures for the video game industry, which saw revenue decline 8% last year, check out the story on the Times' technology blog.

-- Ben Fritz

Related:

Viacom hopes the Beatles: Rock Band game sets stage for rebound

Photo: The Beatles: Rock Band. Credit: MTV Games.

Vice President Joe Biden, Atty. Gen. Eric H. Holder Jr. and FBI Director Robert S. Mueller III are among the top government officials meeting with entertainment industry leaders Tuesday afternoon at the White House to discuss how best to fight piracy of intellectual property.

In its release detailing the meeting, the White House said the round-table discussion that Biden will lead is aimed at showcasing the Obama administration's "commitment to enforcing laws against the piracy of intellectual property."

Industry chiefs who are expected to be participating in the meeting are Viacom CEO Philippe Dauman, Warner Bros. Entertainment CEO Barry Meyer, NBC Universal CEO Jeff Zucker and Sony Pictures CEO Michael Lynton. Directors Guild President Taylor Hackford will also participate. Other government bigwigs scheduled to be at the table include Commerce Secretary Gary Locke, Homeland Security Secretary Janet Napolitano and Secret Service Director Mark Sullivan.

No word if Michaele and Tareq Salahi will also be dropping by.

-- Joe Flint

It may be a long and winding road to profitability for The Beatles: Rock Band.

On a conference call with analysts today following its quarterly earnings report, Viacom executives said that their Rock Band video game franchise, whose only new product last quarter was the Beatles version, is losing money, as it has for the past two years.

"Rock Band was a negative contributor to margins in the third quarter," said Chief Financial Officer Tom Dooley. "We expect it to break even or be slightly profitable in the fourth quarter from a margin point of view. It really depends on how many units we sell in the holiday season."

Losses on Rock Band brought down the operating margin of Viacom's media networks group, which encompasses its cable channels and related products, from 40% to 36%.

Chief executive Philippe Daumann said that Beatles: Rock Band had a "great launch" but also noted that "the economics of our Rock Band franchise are improving, though not as quickly as we'd like."

The game sold 595,000 units during September in the U.S. International sales data hasn't been released, and Viacom didn't provide any specific updates today.

In the past, Rock Band games have lost money for Viacom primarily because of the high cost of manufacturing instrument controllers. For the Beatles game, the company significantly raised the price of a version with instruments and encouraged consumers to buy the software, which is more profitable, and play it with older Rock Band controllers or those from Activision's competing Guitar Hero titles.

-- Ben Fritz

Photo: The Beatles: Rock Band on sale at a Best Buy in New York City. Credit: Daniel Acker/Bloomberg.

Viacom Inc.'s cost-cutting measures, along with stronger results from its Paramount Pictures film unit, paid off in the third quarter as the media company posted a 15% jump in profit despite lower advertising and home video sales.

For the quarter ended Sept. 30, net earnings for the New York-based cable television and film company were $463 million, compared to $401 million for the same period in 2008.  The company also benefited from higher fees paid by cable operators to carry its programming.  

Overall, however, Viacom revenue declined 3% to $3.3 billion for the quarter because of lower sales of advertising on its cable networks and movie DVDs.

The company's earnings per share, excluding a gain for some favorable tax issues and a charge for restructuring its debt, came to 69 cents a share.  Analysts were impressed because they had been expecting Viacom to earn about 57 cents a share.

Viacom Chief Executive Philippe Dauman was particularly pleased with the results from Paramount Pictures, which delivered a profit for the quarter.

Move over SpongeBob SquarePants, some mutant ninja turtles are headed your way.

Viacom Inc.'s kids cable network Nickelodeon has struck a $60 million deal with The Mirage Group and 4Kids Entertainment to acquire the rights to "Teenage Mutant Ninja Turtles," which was one of the biggest kids shows of the 1980s and even spawned a successful movie franchise. Nickeloden will produce a new cartoon series that it hopes to premier in 2012 and sister studio Paramount Pictures will release a new feature based on the series as well.

For Nickelodeon, the move is part of an ongoing strategy to to attract more boys to the channel. Over the past five years, Nickelodeon's reach among boys 6-11 has fallen by almost 10%, and by 6% in the  9-14 category. Rivals including Walt Disney Co., new cable network Disney XD and Time Warner's Cartoon Network, both have programming that is aimed directly at boys and young teens.

Nickelodeon, on the other hand, has often tried to make shows that appeal to both boys and girls, such as its cartoon shows "SpongeBob SquarePants" and "Dora the Explorer," or primarily girls such as is the case with its live action shows "iCarly" and "True Jackson, VP."

The deal is also a change in direction in the type of programming Nickelodeon typically carries, where cartoons tend to be soft and cerebral. "Teenage Mutant Ninja Turtles" follows the adventures of four mutant turtles who fight evil from their home base in the New York City sewer system and are guided by their leader, a rat named Master Splinter.