Hollywood Reporter; ‘South Park’ Streaming Rights Standoff: Judge Rules Against Warners on Some Claims in Licensing Battle

Story from Hollywood Reporter:

A New York judge has trimmed Warner Bros. Discovery‘s lawsuit looking to enforce the company’s exclusive streaming rights to South Park on HBO Max.

Justice Margaret Chan on Tuesday found that Paramount didn’t violate any state consumer protection laws because the complaint revolves around a “private contract dispute” that allegedly caused Warner Bros. Discovery to overpay for certain rights in the $500 million deal and “not conduct that has caused harm to consumers.” She concluded that Paramount didn’t engage in what Warner Bros. Discovery called a “campaign of verbal trickery” that muddled understanding of who held the exclusive rights to the series when it debuted South Park: Post Covid and South Park: The Streaming Wars on Paramount+.

Warner Bros. Discovery in February sued Paramount, South Park Digital Studios and MTV Entertainment, alleging that a $500 million licensing deal reached in 2019 for the exclusive streaming rights to the existing 23-season library and 30 new episodes was breached. It claimed that some of the South Park specials and other related content was diverted to Paramount+ to prop up its own fledgling streaming platform.

Paramount, in turn, fired back with its own counterclaim for breach of contract, arguing that Warner Bros. Discovery is claiming violations of terms that weren’t agreed upon in the deal. It sought $52 million in unpaid licensing fees, though the countersuit was dropped last month.

Dismissal of the claim centering around allegedly deceptive practices was premised on Chan’s finding that Paramount never made false statements as it relates to its description of some South Park specials, which Warner Bros. Discovery claimed were part of the original package of content it licensed. She pointed to evidence that consumers could distinguish that Paramount+ was the exclusive home of two South Park movies per year while Max housed the series’ back catalog.

“Although plaintiff may take issue with defendants’ characterization of the Post-COVID Content and Streaming Wars Content as ‘events’ or ‘movies’ as an attempt to circumvent the terms of the 2019 Agreements, defendants’ literally true public representations are not actionable,” Chan wrote.

Additionally, Chan dismissed a claim that Paramount didn’t act in good faith because it overlapped with Warner Bros. Discovery’s breach of contract claim. She said they allege “the same injuries and damages against the same party.”

Warner Bros. Discovery still has remaining claims for breach of contract, tortuous interference with contract and unjust enrichment. It has refused to pay licensing fees on some episodes that continue to stream on HBO Max, which led to Paramount’s counterclaims.

SPDS — a joint venture between Paramount and South Park‘s creators, Matt Stone and Trey Parker — held open bids in September 2019 for the exclusive streaming rights to South Park. It allegedly insisted upon a flat-rate, per-episode licensing fee.

The agreement provided for two types of content: longform episodes over 20 minutes that first appear on a non-streaming platform, and episodes from seasons 24 to 26 that do not fall into the first category. Among of the long list of disputes is the number of episodes Warner Bros. Discovery was entitled to for those seasons. Warner Bros. Discovery insisted it’s owed 10 for each season, but Paramount countered there was no minimum commitment and that it’s delivered 16 episodes over those three seasons.

The suit pointed to the launch of Paramount+ as the motivation for the company to “embark on a multi-year scheme to unfairly take advantage of Warner/HBO by breaching its contract and stealing content.” It alleged that the company conspired with SPDS and MTV, a subsidiary of Paramount, to “divert as much of the new South content as possible to Paramount+ in order to boost that nascent streaming platform.” According to the complaint, MTV in 2021 reached a $900 million deal with series creators Stone and Parker for new content to premiere exclusively on Paramount+ over the next five years. Under the agreement, 14 South Park movies would release on Paramount+, starting with two films in 2021. MTV allegedly characterized the content as movies opposed to episodes in a “calculated and deliberate attempt” to undermine the 2019 deal with Warners.

On dismissal, Paramount argued that the legal battle is “a garden-variety contract dispute between highly-sophisticated business entities” that doesn’t involve violations or deceptive practices.

© 2023 The Hollywood Reporter.