Trey Parker and Matt Stone accused incoming Paramount president Jeff Shell of meddling in contract negotiations with Warner Bros. Discovery and Netflix.
As Paramount’s lucrative licensing deal for South Park expires, allowing the show to be shopped, a new legal battle is brewing.
Jeff Shell, the RedBird Capital executive who will be the incoming president of new Paramount if the merger with Skydance is completed, has been accused by an attorney for South Park creators Trey Parker and Matt Stone of interfering in contract negotiations with potential suitors.
In a June 21 letter obtained by The Hollywood Reporter, Park County, the entertainment company run by Parker and Stone, threatened legal action for directing Netflix and Warner Bros. Discovery to modify certain terms of their offers in a “manner calculated to benefit Paramount at the expense” of the company. It pointed to Shell urging WBD to give Paramount+ an exclusive 12-month window for new episodes of the show and to shorten the term of the deal from 10 to five years, which could worsen the studio’s bid for the series.
“We hereby demand that you, Redbird, and Skydance immediately cease your interference,” the letter states. “If these activities continue, we will have no choice but to act to both protect our rights and discharge any obligations we may have to the public.”
In a statement, a spokesperson for the David Ellison-led firm said, “Under the terms of the transaction agreement, Skydance has the right to approve material contracts.”
At the heart of the dispute: a joint venture Parker and Stone operate with Paramount called South Park Digital Studios, which owns the streaming rights to the hit animated series. There are two years remaining on Paramount’s $900 million overall deal, with the company in talks to extend the agreement and bring the show to Paramount+.
The ownership structure, which lends itself to conflicts of interest, complicates licensing negotiations for the show. Also at play is pending approval for Skydance’s deal to acquire Paramount. Under federal antitrust laws, the David Ellison-led firm is barred from taking control and issuing directives until the merger’s official closure.
“You did this behind Park County’s back,” writes Afshin Beyzaee, general counsel for the firm, to Shell. “That self-dealing would have been absolutely restricted if it were done by Paramount itself. So, it is simply outrageous that even before it has been granted the authority to close the merger with Paramount, Redbird and Skydance are jumping the gun and using confidential information of SPDS to purport to make demands on behalf of SPDS that even Paramount has no right to make.”
South Park Digital Studios is governed by a five-member board of managers, which includes Paramount affiliate Comedy Partners, though it has limited rights to act on behalf of the joint venture. Against this backdrop, Park County says that Shell “had no right or authority to be demanding that SPDS’s prospective counterparties make modifications to their proposals, especially modifications that would depress the value of their proposals.”
The deal can be traced back to 2007, when Stone and Parker cut a lucrative new agreement with Comedy Central owner Viacom.
Streaming video existed back then, but the market was vastly different: Netflix began streaming videos in January of that year, and Viacom was suing YouTube over copyright infringement. When it came to how consumers watched episodes outside of linear TV, DVDs were the dominant economic force.
The deal struck by Park County and Viacom gave Stone and Parker’s company 50 percent of digital revenue in perpetuity, split with the company. As streaming video proliferated and became a trillion-dollar business, the value of that deal has only multiplied.
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