Paramount Global has accused rival media company Warner Bros Discovery (WBD) of failing to pay more than $52 million in licensing fees associated with the adult animated sitcom “South Park.”
The accusation was levied in a lawsuit filed on Wednesday that serves as a countersuit to one brought by WBD against Paramount in February over the show.
Paramount’s lawsuit says WBD has not paid licensing fees for more than 300 episodes of South Park, which are distributed on WBD-owned streaming service HBO Max. The rights include new South Park episodes that debut on HBO Max about a day after they first air on Paramount-owned cable channel Comedy Central.
WBD agreed to pay Paramount and South Park Studios $500 million for the rights to the show in 2020 after a contract with Disney-owned streaming service Hulu expired. The following year, Paramount announced it had inked a deal with South Park Studios for more than a dozen South Park movies, which were set to debut on Paramount’s streaming service, Paramount Plus.
The South Park movies aren’t feature length films; instead, they resemble something similar to a television special, with each one divided into two parts that last about an hour each. At issue is whether the specials — which haven’t aired on Comedy Central — are covered by Paramount’s licensing agreement with WBD.
WBD’s position is that the specials should be made available to HBO Max. To date, they haven’t. In February, WBD sued, arguing Paramount used creative language in its agreement to keep the South Park specials off HBO Max. (Coincidentally, one of the specials in question is called “The Streaming Wars,” which centers around companies battling for water rights. One of the companies is called “Pi Pi Plus,” a veiled nod to Paramount Plus, and there’s even a lawsuit in the second part of the special where witnesses talk about creating “boats” for various “streaming services.”)
This week, Paramount launched its counter-attack, suing WBD for back payments associated with South Park episodes that continue to be available on HBO Max.
“Warner Bros. Discovery has indefensibly refused to pay the more than $50 million dollars it owes for South Park content that it has undisputedly received and which HBO Max continues to air and exploit,” a lawyer for Paramount wrote in the company’s complaint. “[WBD’s] argument that Paramount Global was required to deliver additional South Park content is baseless and wholly unsupported by the parties’ agreement.”
WBD also complains that Paramount has failed to deliver on a number of episodes that were guaranteed in its licensing agreement. In 2020, South Park Studios produced a limited number of episodes due to the coronavirus health pandemic, which Paramount delivered. The amount of episodes was apparently below the guarantee Paramount made per season. WBD expected 30 episodes over the course of two seasons, but only received 14 episodes due to the pandemic.
Paramount says it doesn’t owe WBD anything more than the episodes that were produced and delivered over those two pandemic-impaired seasons.
“The Term Sheet Sheet reflects no episodic commitment whatsoever for the new seasons of ‘South Park,'” Paramount’s lawyer asserted in its counterclaim. “The Term Sheet likewise reflects no term that could require South Park Studios to offer to license to WarnerMedia the rights to any made-for-streaming movies developed outside the television seasons.”
Paramount says WBD has paid around $275 million of the $500 million in licensing rights owed for distributing “South Park” on HBO Max, but has “given clear indications that it will not pay any of the remaining $225 million-plus in licensing fees still owed for the rest of the five-year term of [its contract].”
When it comes to payments, both sides have apparently agreed that Paramount can “withhold an equal amount of payments that were otherwise owed pursuant to different deals between the parties” — likely for WBD-owned films and TV shows licensed to Paramount Plus, cable network Showtime and free streamer Pluto TV — until WBD pays what is owed for South Park.
“However, Paramount Global has never agreed that [WBD] was entitled to withhold any payments in the first place,” a Paramount lawyer wrote in a footnote of the complaint, “and it has always been Paramount Global’s position that the parties should simply comply with their contractual obligations.”
The matter is being heard in a division of New York state court that deals with media and entertainment-related contracts.