South Park: Billion-dollar streaming deal up in the air – creators threaten Skydance with lawsuits

A billion-dollar streaming deal for South Park hangs in the balance as the show’s creators threaten to take legal action and halt production.

Trey Parker and Matt Stone, the minds behind the satirical animated series South Park, submitted a request to Paramount Global, the series’ owner, in February. They proposed an extension of the show’s production for several additional years.

As discussions to prolong the current deal, set to expire in 2027, were underway, Paramount was negotiating a new deal for South Park’s streaming rights. This deal could potentially be worth up to $2.5 billion. However, Skydance Media, a major independent film and TV production company, has entered the scene with an interest in acquiring Paramount. Skydance reached out to HBO and Netflix directly to state its position on the deal’s terms and deadlines, sparking a backlash from Parker and Stone. The creators accused Skydance of meddling and threatened legal action, according to a letter disclosed by Bloomberg.

“We have learned that you have reached out to Netflix and Warner Bros. Discovery to intervene in the process,” the letter from Parker and Stone’s attorney to RedBird Capital Partners, Skydance’s advisor and a stakeholder in the Paramount acquisition, read.

Paramount had intended to divide streaming rights between HBO Max and its own platform, Paramount+. The HBO Max agreement alone was projected to generate over $1 billion over the next ten years, with the Paramount+ deal expected to yield a similar amount. These deals were contingent on the series’ creators continuing to produce new episodes.

Skydance, led by CEO David Ellison, defended its actions, stating it was only trying to impose “financial discipline” on Paramount. “Under the terms of the acquisition agreement, Skydance has the right of approval on significant contracts,” the company said in a statement.

The South Park dispute has already caused significant tension between Skydance and one of Paramount’s most valuable creative assets, even before the acquisition deal is finalized. Furthermore, it highlights how the delay in concluding the merger – partly due to Donald Trump’s involvement in a legal dispute with Paramount’s CBS over editing a Kamala Harris interview – has resulted in disarray within both companies.

Paramount employees report that the studio is in a state of “freeze”, unable to make crucial decisions while the acquisition is being negotiated.

More than a dozen sources from both sides have confirmed this narrative.

In 2023, the merger between Paramount and Skydance was announced. As a result, Shari Redstone will transfer control of the company to David Ellison, the son of tech mogul Larry Ellison. Ellison, who is set to become the new CEO, is reportedly trying to delay the extension of the deal with the creators of the show until the acquisition gets the green light from federal authorities.

Ellison, along with his advisor Jeff Shell from RedBird, are reportedly leaning towards either a smaller deal with HBO Max and Paramount+, or a larger, exclusive global deal with Netflix. These negotiations have been ongoing for several months, which has forced Paramount to sign a temporary extension to its deal with HBO Max.

After 28 years and over 300 episodes, South Park continues to be one of the most popular shows on streaming platforms and a staple for Comedy Central. The show, created by Parker and Stone who were classmates at the University of Colorado, caused a sensation upon its debut in 1997. It has since evolved into a commercial franchise that includes films, video games, and distribution deals worth hundreds of millions of dollars.

As early as 2007, Parker and Stone had already secured a 50% share of any future online exploitation of the series. In 2019, they transferred the rights to HBO Max in a five-year deal worth over $500 million. Paramount later found this deal to be unprofitable as it restricted them from strengthening their own streaming platform.

When the new negotiations began, Paramount’s aim was to merge Paramount+ with a second platform to ensure maximum financial return. However, Skydance is hesitant about a long-term commitment due to the rapid changes in the media landscape. They are leaning towards a more limited five-year deal or a large exclusive deal with Netflix. This option would limit costs but would also deprive Paramount+ of one of its key assets.

Parker and Stone’s company argues that a mixed model involving HBO Max, Paramount+, and international licensing would yield better financial results than an exclusive partnership with Netflix.

The production of new episodes by the creative duo is a prerequisite for any deal, thereby strengthening their bargaining position.

“It’s scandalous that RedBird and Skydance are pushing ahead so aggressively before even securing approval for their merger with Paramount,” stated the creators’ production company, Park County, in a letter initially disclosed by The Hollywood Reporter.

Information sourced from Bloomberg