A New York court has ruled that Paramount must defend itself against allegations that it orchestrated a breach of a $500 million licensing agreement with Warner Bros. Discovery (WBD) for exclusive streaming rights to the animated comedy series “South Park.” The lawsuit, filed by WBD in 2023, claims that Paramount and South Park Digital Studios (SPDS) conspired to divert “South Park” specials to Paramount+, undermining WBD’s exclusive rights, according to a report from The Hollywood Reporter.
At the heart of the dispute is a 2019 deal in which WBD secured exclusive rights to stream “South Park’s” library and 30 new episodes across seasons 24 to 26. However, the agreement lacked specifics on the number of episodes per season and how to classify content. WBD alleges that Paramount and SPDS exploited this ambiguity by producing “specials” that fell outside the scope of the deal and were instead streamed on Paramount+.
Justice Margaret A. Chan of the State Supreme Court in Manhattan ruled that Paramount may have “actively convinced” SPDS to breach its contract with WBD. She noted that Paramount potentially benefited unfairly by securing the “South Park” specials and profiting from their streaming without engaging in a competitive bidding process.
The ruling allows WBD to proceed with discovery, potentially gaining access to viewership data, subscriber metrics, and profitability figures from Paramount. This information could be used to support WBD’s claim for disgorgement of profits, seeking to recover the financial gains Paramount allegedly made from the “South Park” specials.
The court highlighted that WBD believed it was acquiring exclusive rights to all “South Park” content released between 2019 and 2025. However, SPDS allegedly made the decision to produce specials that it unilaterally deemed outside the scope of the agreement with WBD.
The ruling also points to inconsistencies in how SPDS categorized “South Park” episodes, particularly those produced during the COVID-19 pandemic. SPDS initially classified these episodes as separate from season 24 but later included them as part of the season, ultimately changing its stance again to exclude them.
Justice Chan emphasized the ambiguity of the contract, which lacked clarity on crucial details such as defining what constitutes a season and whether WBD could pursue disgorgement of profits from a third party like Paramount.
The court’s decision allows WBD to pursue claims of unjust enrichment and tortious interference with contract against Paramount. The lawsuit also includes a breach of contract claim against SPDS.
This legal battle highlights the complexities of content licensing agreements in the streaming era and the potential for disputes over exclusivity and content classification. The outcome of this case could have significant implications for the streaming industry and how content rights are negotiated and enforced.