THQ prevails in WWE arbitration with Jakks Pacific

A deal has been reached between THQ and Jakks Pacific following a long-running battle over royalty payments. Arbitrators have ruled that THQ is entitled to a reduction in royalties paid to Jakks and a new rate, 40 per cent lower than the previous one, has been established.

As a result, the publisher is expected to report a one-time benefit of USD 23 million during its fiscal 2010 quarter, ending September 30. Analysts are also predicting the agreement will be worth an estimated USD 8 million in incremental annual gains to the company and, reflecting this in their forecasts, have raised their share price estimates for 2010 from USD 0.66 to USD 0.74.

Under the terms of the agreement between Jakks and THQ, the former is paid a preferred return from sales of the LLC's WWE-licensed videogames. This preferred rate was reset for the period beginning July 1, 2006 and the two parties were unable to agree on a new one, prompting THQ to file a suit and roll into motion the arbitration process.

"As we expected, we have prevailed in this matter. We are gratified the arbitrator agreed the preferred return rate to Jakks Pacific on WWE videogames will be significantly lower," commented James M. Kennedy, THQ's executive vice president of business and legal affairs.

It was recently reported THQ had also filed a lawsuit against Jakks Pacific for extending the WWE contract without its permission.