In re THQ - JAKKS Pacific Arbitration
Analysis Group client THQ – a maker of interactive entertainment software – prevailed in a binding arbitration with toymaker JAKKS Pacific in a dispute over royalty receivable rates. The royalty payments were for video games the companies produced jointly under license from World Wrestling Entertainment. The new rate that THQ agreed pay JAKKS was 40 percent lower than the previous rate, and was expected to help THQ realize a one-time benefit of $23 million during its fiscal quarter ending September 30, 2009.
THQ counsel Irell & Manella LLP retained Analysis Group to evaluate the economic factors as articulated in the joint venture agreement, and to analyze historical and projected financial statements for the joint venture. Managing Principal Jeffrey H. Kinrich and Analysis Group affiliate William W. Holder of the University of Southern California's Marshall School of Business submitted expert reports in the matter. Vice President Michael Beauregard supported Mr. Kinrich, and Senior Advisor Elizabeth Evans supported Professor Holder. The lower, preferred return payment rate agreed upon in the arbitration covered the THQ/JAKKS joint venture for the period July 1, 2006 through December 31, 2009.