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When Warner Bros. Discovery won the big-ticket bidding war for the streaming rights to the South Park library, it didn’t get everything it wanted. At least that’s what Paramount Global is arguing in its counterclaim in an escalating fight over licensing rights to the long-running and lucrative animated series.
WBD in February sued Paramount, South Park Digital Studios and MTV Entertainment Studios over a 2019 licensing deal, alleging that it paid more than $500 million for exclusive streaming rights to the existing 23-season library and 30 new episodes and that pact is being breached to prop up Paramount+. It characterizes a subsequent $935 million deal between Paramount Global (then ViacomCBS) and South Park creators Trey Parker and Matt Stone for 14 made-for-streaming movies to air on Paramount+ as “verbal trickery” and “grammatical sleight-of-hand” designed to circumvent the WBD deal.
Paramount on Tuesday filed its answer and a counterclaim for breach of contract, as well as a partial motion to dismiss the complaint. The company is seeking $52 million in unpaid licensing fees, asking the court for a declaration that it’s entitled to receive the agreed-upon $1.68 million per episode.
Paramount argues that the agreement detailed the “exact contours” of the parties’ rights and obligations — with South Park retaining all other rights not granted in the deal — and alleges WBD is claiming breaches of terms that don’t actually exist in their deal to justify its nonpayment of the licensing fees.
One key point of contention is the number of episodes WBD was entitled to for seasons 24-26. It insists it’s owed 10 for each season, but Paramount says there was no minimum commitment and it has delivered 16 episodes comprising those three seasons.
“Despite receiving all of the content required under the Term Sheet, WarnerMedia apparently began to regret the actual terms of the deal it made,” states the filing, which is embedded below. “Indeed, unlike other streaming platforms involved in the bidding for the rights to the South Park television episodes in 2019, WarnerMedia did not seek to include a required minimum number of episodes for Seasons 24 to 26 in the Term Sheet. Likewise, WarnerMedia never sought, and certainly did not obtain, the right to license any ‘made-for-streaming’ movies in the Term Sheet. And for good reason. South Park Studios would not have agreed to license any ‘made-for- streaming’ movie rights on the same terms as, and certainly not for the price of, an episode of the television series.”
WBD is still streaming the library episodes, made-for-TV documentary, other shortform content and 16 episodes from seasons 24-26 — but refuses to pay licensing fees because of Paramount’s alleged breach, according to the filing, which argues that WBD is the one that’s breaching their deal by failing to pay $52 million that’s past due and indicating it will continue to withhold more than $225 million in licensing fees.
“WarnerMedia’s wholesale refusal to pay for any of the South Park content it admits it has received and is continuing to exploit constitutes a clear and knowing breach of its obligations under the Term Sheet,” states the filing. “[E]ven by its own calculation, WarnerMedia has received 96 percent of the total content it believes it is owed under the Term Sheet. A nominal shortfall of 4 percent of the content WarnerMedia (wrongly) believes it is entitled to under the Term Sheet is hardly grounds to refuse to pay more than $52 million in license fees currently owed to South Park Studios, or to repudiate all future payment obligations, for the indisputably valuable content it continues to exploit on HBO Max.”
Paramount on Tuesday also filed a partial motion to dismiss, arguing that this is “a garden-variety contract dispute between highly-sophisticated business entities” and any claim other than breach of contract is extraneous. It’s asking the court to toss two of them: deceptive practices and breach of the implied covenant of good faith and fair dealing (the former because it requires harm to consumers and the latter because it’s duplicative of the breach of contract claim).
A hearing date hasn’t been set, but Paramount is asking for June 30 or as soon as possible after.
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