Paramount’s South Park Counterclaims

In March, based on a tip from OCU 1L Austin Manley, we reported that HBO’s parent company, Warnermedia Direct is suing Paramount and others for breach of a 2019 deal in which HBO claims it won an intense bidding war by offering  $500 million for an exclusive license to stream episodes of the South Park animated television series, including three seasons’ worth of new episodes.  The earlier post concludes, “Expect counterclaims alleging that HBO has failed to pay the licensing fees.”  Austin Manley, having completed his first year of law school, followed up, providing me with those very counterclaims, which Paramount filed on April 19th.

As readers may recall, HBO Max bought an exclusive license to stream episodes of the South Park animated television series.  According to HBO, that license covered existing content plus three seasons consisting of ten new episodes each season.  It alleges that Paramount delivered only fourteen of the promised new episodes while also entering into a separate deal with South Park‘s creators giving Paramount + exclusive rights to air new South Park content, including movies and specials.

In its counterclaims, Paramount answers in the manner of Officer Barbrady (left): “Nothing to see here, people!  Move along!”  Two sophisticated parties entered into a deal with specific terms.  All of those terms have been complied with, but for some reason, HBO Max is refusing to pay the licensing fees!  

Crucially, Paramount claims that the terms did not specify a number of episodes to be included in each South Park season and then boasts of its delivery for fourteen episodes despite the production challenges caused by the COVID epidemic and the creators’ desire to experiment with different formats for the presentation of new South Park material.  Moreover, although HBO Max is refusing to pay for the South Park material that has been delivered and which it is continuing to stream, it has not been charged for the non-existent episodes to which it claims entitlement. 

From Parmount’s perspective, COVID had two effects on the production of South Park episodes.  First, COVID restrictions made it impossible for the shows staff to create new 22-minute episodes at their usual breakneck speed.  They could not come together to work as they usually did.  Second, COVID provided ample new material that cried out for South Park‘s unique brand of social commentary.  The South Park team adapted by creating “supersized” pandemic-related episodes that were wildly popular and gave a tremendous boost to the value of the licenses that HBO Max was already enjoying.  

Paramount therefore seeks $52 million owed under the license agreement on its breach of contract claim.  It also seeks a declaratory judgment upholding its interpretation of the parties’ obligations.