As Paramount's lucrative licensing deal for the iconic animated series South Park comes to an end, a new legal dispute is unfolding. The show is now available to be shopped around to potential suitors, but tensions are rising as Jeff Shell, an executive from RedBird Capital and the incoming president of Paramount (pending the merger with Skydance), faces serious accusations. An attorney representing South Park creators Trey Parker and Matt Stone claims that Shell has disrupted contract negotiations with various bidders.
In a letter dated June 21 and obtained by The Hollywood Reporter, Park County, the entertainment company founded by Parker and Stone, has threatened legal action against Shell. The letter alleges that Shell directed both Netflix and Warner Bros. Discovery to alter the terms of their offers in a way that would unfairly benefit Paramount. Specifically, it highlights Shell's push for WBD to grant Paramount+ an exclusive 12-month window for new episodes, as well as to reduce the deal's duration from ten years to five. Such changes could potentially diminish the value of any bids 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 response, a spokesperson for the firm led by David Ellison indicated that, "Under the terms of the transaction agreement, Skydance has the right to approve material contracts."
At the core of this dispute lies a joint venture between Parker and Stone and Paramount known as South Park Digital Studios, which holds the streaming rights to the beloved series. With two years remaining on Paramount's substantial $900 million overall deal, negotiations are currently underway to extend the agreement to bring South Park to Paramount+. However, the ownership structure of this joint venture complicates licensing negotiations and raises potential conflicts of interest.
Moreover, the ongoing merger with Skydance is still pending approval, and under federal antitrust laws, the firm led by David Ellison is prohibited from exercising control or issuing directives until the merger is finalized.
In a pointed message to Shell, Afshin Beyzaee, general counsel for Park County, stated, “You did this behind Park County’s back.” He further elaborated that such self-dealing would be strictly prohibited if conducted by Paramount itself. Beyzaee expressed outrage that Redbird and Skydance were allegedly using confidential information from South Park Digital Studios to make demands on behalf of the entity, even before the merger's official closure.
South Park Digital Studios operates under a five-member board of managers that includes Paramount affiliate Comedy Partners, although it has limited rights to act on behalf of the joint venture. Against this backdrop, Park County asserts that Shell “had no right or authority to demand that SPDS’s prospective counterparties modify their proposals, particularly in ways that would reduce their value.”
The current licensing deal can be traced back to a 2007 agreement between Parker, Stone, and Viacom, the owner of Comedy Central. At that time, the streaming landscape was vastly different; Netflix had just begun streaming videos, and DVDs were the primary method consumers used to watch episodes outside of traditional TV. The deal structured by Park County and Viacom entitled Parker and Stone’s company to 50 percent of digital revenue indefinitely, a split with the company.
As streaming video has evolved into a trillion-dollar industry, the value of this agreement has only increased. For instance, HBO Max's 2019 deal for South Park reruns was valued at $550 million, with half of that revenue going directly to Park County. With more than 300 episodes in the South Park library and new episodes continuously being produced, future deals are expected to generate significant revenue for years to come, despite ongoing legal challenges and negotiations.
