Warner V Paramount Answer

FILED: NEW YORK COUNTY CLERK 04/19/2023 09:01 PM INDEX NO.
651001/2023
NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 04/19/2023
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK: COMMERCIAL DIVISION
WARNERMEDIA DIRECT, LLC,

Index No. 651001/2023
Plaintiff,
Hon. Margaret Chan
v. IAS Part 49
PARAMOUNT GLOBAL, SOUTH PARK

DIGITAL STUDIOS LLC and MTV ANSWER AND COUNTERCLAIMS
ENTERTAINMENT STUDIOS,
Defendants.
ANSWER
Defendants Paramount Global, South Park Digital Studios LLC, and MTV Entertainment
Studios (collectively, “Defendants”), by their undersigned attorneys, as and for their Answer to
the Complaint, dated February 24, 2023 (“Compl.”), state as follows:1
Plaintiff’s Allegation:
1. This is a case about Defendants’ opportunistic repudiation of

Warner/HBO’s exclusive streaming rights in the popular animated
comedy series South Park, for which Warner/HBO agreed to pay
more than half a billion dollars. When Paramount decided to launch
a new streaming platform of its own (“Paramount+”), its priorities
changed drastically, and Defendants embarked on a multi-year
scheme to unfairly take advantage of Warner/HBO by breaching its
contract and stealing its content. That scheme, which was blatantly
intended to prop up Paramount+ at the expense of Warner/HBO, is
the subject of this lawsuit.
Defendants’ Response:
1. Defendants deny the allegations set forth in paragraph 1, except admit that Plaintiff
did agree to pay monies for the subject streaming rights.
1
Pursuant to Commercial Division Rule 6(d), Defendants have interlineated each paragraph in
plaintiff’s complaint with Defendants’ response to that paragraph.
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FILED: NEW YORK COUNTY CLERK 04/19/2023 09:01 PM INDEX NO. 651001/2023
2. South Park (“the Series”) is an extremely valuable franchise.

The Series has aired for more than twenty years and throughout that
time has remained wildly popular with its fanbase, which is
primarily composed of the key age 18-34 demographic. Although
nearly all South Park episodes first air on Comedy Central, one of
Paramount’s cable channels, a lucrative aftermarket has emerged for
the digital rights to this content. Similar to sitcoms such as Friends
and The Big Bang Theory, the South Park franchise is “anchor”
content on any platform, and therefore central to branding and
marketing for any distributor of the Series. The availability of South
Park episodes on a streaming platform can increase subscribers and
subscription fees, as well as draw in advertisers.
2. Defendants admit that the South Park series is valuable and has been on the air for
more than twenty years, and that South Park episodes initially air on Comedy Central, a cable
channel owned by one of Paramount Global’s subsidiaries. Defendants presently lack knowledge
of information sufficient to form a belief as to the truth of the remaining allegations set forth in
paragraph 2.
3. Cognizant of this tremendous value, SPDS—a joint venture

between Paramount and South Park’s creators, Matt Stone and Trey
Parker—held open bids in September 2019 for the exclusive
streaming rights to South Park. SPDS publicly announced that these
rights would encompass both the existing library, as well as 30 new
episodes for upcoming seasons 24, 25, and 26 (more than 300
episodes in all). The bidding was fierce, with a number of major
entertainment companies vying to acquire the rights. In the end,
Warner/HBO had to aggressively outbid its competitors to win
exclusive rights to the Series, signing a contract with SPDS in
October 2019. Under its terms, Warner/HBO agreed to pay more
than half-a-billion dollars to SPDS in exchange for exclusive
streaming rights to the Series’ entire library and three new seasons
of content.
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3. Defendants deny the allegations set forth in paragraph 3, except admit that several
companies did submit competing proposals to license the streaming rights to certain South Park
content from SPDS, and Plaintiff and SPDS did sign a contract in October 2019 in which Plaintiff
agreed to pay monies to SPDS.
4. In reliance on gaining these exclusive rights, HBO Max (the

Warner/HBO streaming platform) started touting its exclusive
streaming of South Park in its advertising.
4. Defendants presently lack knowledge of information sufficient to form a belief as
to the truth of the allegations set forth in paragraph 4.
5. After the Parties started performing under the contract,

Paramount launched its own streaming platform, Paramount+.
While that was certainly within Paramount’s rights, on information
and belief, SPDS, Paramount, and MTV Entertainment Studios
(Paramount’s indirect subsidiary) then engaged in an illicit scheme
to unfairly and deceptively divert to its nascent streaming platform
South Park content belonging exclusively to Warner/HBO.
Defendants apparently considered the success of Paramount+ to
warrant—if not require—multiple and flagrant duplicitous
contortions of fact and breaches of contract, as well as other forms
of misconduct described in detail below.
5. Defendants deny the allegations set forth in paragraph 5, except admit that
Paramount Global, through a subsidiary, operates a streaming platform currently known as
Paramount+.
6. Warner/HBO brings this lawsuit to vindicate its rights and

recover the hundreds of millions of dollars in damages incurred as a
result of Defendants’ misconduct. On information and belief, even
Defendants have valued those damages in the hundreds of millions.
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6. Paragraph 6 contains legal conclusions, as to which no response is required. To the
extent a response is required, Defendants deny the allegations set forth in paragraph 6.
7. Plaintiff WarnerMedia Direct, LLC (“Warner/HBO”) is a

limited liability company organized and existing under the laws of
Delaware with its principal place of business in New York, New
York. Warner/HBO is the domestic operator of HBO Max, a
subscription video-on-demand streaming platform.
8. Defendant Paramount Global (“Paramount”), formerly

known as ViacomCBS, Inc., is a corporation organized and existing
under the laws of Delaware with its principal place of business in
New York, New York. Paramount is a multinational mass media
and entertainment corporation that owns and operates properties
such as Paramount Pictures (a film and television studio), CBS
Entertainment Group (consisting of the CBS television network,
television stations, and other CBS-branded assets), media networks
(consisting of cable television networks including Comedy Central,
MTV, Nickelodeon, BET, and Showtime), and streaming platforms
(including Paramount+ and Pluto TV).
8. Defendants admit that Paramount Global, formerly known as ViacomCBS, Inc.,
is a corporation incorporated under the laws of Delaware with its principal place of business in
New York, and that Paramount Global is a multinational entertainment and mass media company
that owns and operates numerous properties.
9. Defendant South Park Digital Studios LLC (“SPDS”) is a

limited liability company organized and existing under the laws of
Delaware with its principal place of business in California. SPDS
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is a joint venture between Paramount and the creators of South Park,

Trey Parker (“Parker”) and Matt Stone (“Stone”).
9. Defendants deny the allegations set forth in paragraph 9, except admit that SPDS
is a limited liability company organized and existing under the laws of Delaware with a principal
place of business in California.
10. Defendant MTV Entertainment Studios (“MTV”) is, upon

information and belief, an indirect subsidiary of Paramount Global,
and has its principal place of business in New York, New York.
10. Defendants deny the allegations set forth in paragraph 10, except admit that MTV
Entertainment Studios is a division of Paramount Global.
11. This Court has jurisdiction over Defendants pursuant to

CPLR §§ 301 and 302, because Paramount’s and MTV’s principal
place of business are in New York and Defendants regularly conduct
and transact business in New York.
11. Paragraph 11 contains legal conclusions, as to which no response is required.
Notwithstanding, Defendants do not contest jurisdiction in this matter.
12. Venue is proper in New York County pursuant to CPLR §

503 because Warner/HBO and Paramount are residents of New
York County.
Notwithstanding, Defendants do not contest venue in this matter.
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13. This case is appropriate for assignment to the Commercial

Division because the amount in controversy exceeds $500,000 and
the primary claims pertain to breach of contract and business torts.
Notwithstanding, Defendants do not contest assignment to the Commercial Division in this matter.
14. Warner/HBO is part of Warner Bros. Discovery (“WBD”),

a leading global media and entertainment company that creates and
distributes the world’s most differentiated and complete portfolio of
content and brands across television, film, and streaming. WBD’s
iconic brands and products include HBO, HBO Max, Discovery
Channel, discovery+, CNN, DC, HGTV, Food Network, OWN,
Investigation Discovery, TLC, Magnolia Network, TNT, TBS,
TruTV, Travel Channel, MotorTrend, Animal Planet, Science
Channel, Warner Bros. Pictures, Warner Bros. Television, Warner
Bros. Games, New Line Cinema, Cartoon Network, Adult Swim,
Turner Classic Movies, Discovery en Español, Hogar de HGTV, and
others.

15. Warner/HBO, together with its affiliated entities, operate

HBO Max, a subscription video-on-demand streaming platform, and
licenses content on its behalf for distribution on the platform. By
purchasing a monthly subscription to HBO Max, users can access
this content by streaming programs on demand via either an ad-
supported or non-ad-supported plan.
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16. HBO Max features original programming from its namesake

network, HBO, along with programming and films curated from
across WBD’s portfolio of networks, brands, and franchises, and
licensed from third-party studios and producers.
17. Like any streaming platform, HBO Max is specifically

programmed to attract and retain the broadest possible range of
subscribers, as the competition to obtain popular content is
extremely fierce among streaming platforms. The inclusion of
exclusive content offerings generally attracts premium advertisers.

18. South Park is an extraordinarily popular animated television

series. New episodes of the Series have consistently been among
the top performers on HBO Max since its launch in 2020, based on
key streaming metrics such as “first views” (i.e., the first show a
subscriber watches when they launch the streaming platform), “total
hours viewed,” and “viewing accounts” (i.e., what
number/percentage of subscribers have engaged with the Series).
18. Defendants admit that South Park is a popular animated television series.
Defendants presently lack knowledge of information sufficient to form a belief as to the truth of
the remaining allegations set forth in paragraph 18.
19. Since its debut in 1997, South Park has been nominated for
18 Emmys (winning five), was adapted into a theatrical film (1999’s
South Park: Bigger, Longer & Uncut, which grossed over $80
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million worldwide—approximately $150 million in today’s

dollars—on a $21 million budget), and has been watched by tens of
millions of viewers.
19. Defendants deny the allegations set forth in paragraph 19, except admit that South
Park was originally released in 1997 and has been widely viewed, has won an Emmy Award on
five occasions, and that in 1999 the theatrical film South Park: Bigger, Longer & Uncut was
released, which grossed over $80 million in the worldwide box office.
20. South Park episodes currently premiere on Comedy Central,

a cable network owned by Paramount.
20. Defendants admit that episodes of the South Park series currently premiere on
Comedy Central, a cable network currently owned by one of Paramount Global’s subsidiaries.
21. In 1998, Paramount Pictures Corporation (“PPC”), a

Paramount affiliate that owns and operates the Paramount Pictures
film and television studios, entered into a Joint Production
Agreement (the “1998 Agreement”) with Warner Bros.
Entertainment Inc. (“WB”), then a division of Time Warner
Entertainment Company, L.P., and now a subsidiary of WBD, and
an affiliate of Warner/HBO.
21. Defendants deny the allegations set forth in Paragraph 21, except admit that in 1998
Paramount Pictures Corporation entered into the 1998 Agreement with WB, and respectfully refer
the Court to that agreement for its full contents. Defendants lack knowledge and information
sufficient to form a belief as to the truth of the allegations concerning WB’s corporate ownership.
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22. Pursuant to the 1998 Agreement, WB and PPC each had a

50% interest in the motion picture that would become South Park:
Bigger, Longer & Uncut, as well as in its copyright and any sequel.
22. Defendants deny the allegations set forth in Paragraph 22, except respectfully refer
the Court to the 1998 agreement for a true and accurate recitation of its full contents.
23. Pursuant to the 1998 Agreement, and premised on their

shared ownership, the Parties agreed that all subsequent productions
based on the motion picture—including sequels and feature length
home video productions—would require mutual agreement in
writing.
24. Two decades later, on September 12, 2019, Paramount and

its subsidiary, Comedy Central, issued a press release announcing
that South Park’s creators, Parker and Stone, were extending the
Series by “three seasons and 30 episodes in a new deal with
Comedy Central, taking the longest-running primetime scripted
series in cable through an unprecedented 26th season and at
least 327 episodes.”
25. SPDS then solicited bids for the exclusive right to stream the
30 new episodes after their Comedy Central premieres, as well as
the exclusive right to stream the existing library of old episodes
(representing, in total, more than 300 episodes).
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25. Defendants deny the allegations set forth in paragraph 25, except admit that in 2019
SPDS considered offers for the right to license the streaming rights to the South Park television
series, and that the existing library of the South Park television series consisted of over 300
episodes.
26. South Park is premium content and a top performer,

especially with the highly prized 18-34 audience that is dedicated to
the show and engages in repeated viewing.
to the truth of the allegations set forth in paragraph 26, except admit that South Park is valuable
content.
27. Warner/HBO expected South Park to serve as a critical

content offering that would differentiate HBO Max from other
streaming platforms, attract new subscribers by targeting a key
demographic that HBO content alone did not traditionally serve, and
solidify its subscriber base.
28. Warner/HBO participated in the bidding process, which was

extremely competitive.
28. Defendants admit that Plaintiff submitted a proposal to license certain streaming
rights and that other third parties also submitted competitive proposals.
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29. During the bidding process, SPDS encouraged Warner/HBO

to propose a flat-rate, per-episode license fee that would apply
equally to all Series episodes: both the older “library” episodes
(seasons 1 through 23) and the new episodes to be produced for
seasons 24 through 26.
29. Defendants deny the allegations set forth in paragraph 29.
30. On information and belief, SPDS knew that the older

“library” episodes of South Park were far less valuable than the new
episodes SPDS would be licensing for seasons 24 through 26.
31. Nevertheless, SPDS told Warner/HBO that it would likely

reject any bid that offered differentiated pricing for the older
episodes (as opposed to the new episodes).
32. In other words, SPDS said that it would consider only offers
with the highest “flat fee” per episode (whether old or new).
33. Warner/HBO acted in reliance on that information, assuming

that SPDS was making similar statements to other bidders.
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34. To calculate a single, blended, per-episode rate as SPDS
requested, Warner/HBO agreed to consider the value of the existing
library, the value of the new episodes, and the total number of new
episodes.
35. By adding the relatively lower per-episode fee amounts for

the library episodes to the relatively higher per-episode fees for the
new episodes, and then dividing that by the combined number of old
and new episodes, Warner/HBO would be able to offer a
competitive flat-fee per-episode bid.
36. Thus, SPDS’s representations that the new seasons would

comprise 30 episodes were essential to Warner/HBO’s calculation
of its proposed per-episode rate. On information and belief, SPDS
knew that its representations about the number of new episodes were
dispositive in securing the highest possible bids.
37. On information and belief, SPDS knew that if it actually

intended to offer fewer than 10 episodes for each of the new seasons,
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the reduced number of episodes would mean a lower flat-fee per-

episode bid.
38. Conversely, on information and belief, SPDS knew that

more new South Park episodes would garner higher flat-fee bids.
39. Thus, SPDS’s representation of 10 new episodes per season

was essential to the bids made by Warner/HBO and other bidders.
40. In October 2019, prior to receiving Warner/HBO’s bid,

SPDS again confirmed to Warner/HBO that the exclusive streaming
license would include at least 333 total episodes—in other words,
the 303 existing “library” episodes and 10 new episodes for each of
seasons 24 through 26.
41. Exclusivity was so important to Warner/HBO that when

SPDS asked Warner/HBO whether it would consider sharing the
rights to South Park with CBS All Access or another Paramount
streamer, Warner/HBO rejected the proposition as a “non-starter.”
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42. In reliance on SPDS’s representations, on or about October

19, 2019, Warner/HBO proposed a flat-rate license fee of
$1,687,500 for each episode—offering a total of more than half a
billion dollars for the exclusive domestic streaming rights to the 333
South Park episodes SPDS had agreed to license.
42. Defendants deny the allegations set forth in paragraph 42, except respectfully refer
the Court to the Term Sheet between WarnerMedia Direct, LLC and SPDC for a true and accurate
recitation of its full contents and deny any allegations that conflict with such document.
43. Following an intensive bidding war, SPDS accepted

Warner/HBO’s bid.
ultimately accepted WarnerMedia Direct, LLC’s offer.
44. On October 22, 2019, the Parties entered into an agreement,

using a binding term sheet that memorialized the terms of the deal
(the “2019 Agreement”).
and WarnerMedia Direct, LLC entered into a binding term sheet effective October 22, 2019 (the
“Term Sheet”) and respectfully refer the Court to that document for its full contents.
45. Although, by its terms, the Parties expected to subsequently

draft a final agreement, at SPDS’s suggestion, the Parties agreed to
treat the term sheet as the final agreement.
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45. Defendants deny the allegations set forth in paragraph 45, except admit that the
Term Sheet is a valid and enforceable agreement, and respectfully refer the Court to that document
for its full contents.
46. The 2019 Agreement’s term extended from June 24, 2020
through June 23, 2025 (the “Term”).
46. Defendants respectfully refer the Court to the Term Sheet for its full contents and
deny any allegations that conflict with such document.
47. The 2019 Agreement provided for two types of content

(collectively, the “Licensed Content”).
a. The first type of content comprised long-form episodes (i.e., over 20
minutes) that first premiered on a non-streaming platform, (i.e., a Nielsen-
rated basic cable network such as Comedy Central or a major broadcast
network such as CBS) (“Type A Licensed Content”).
b. The second type of content comprised all season 24-26 episodes that did not
meet the premiering criteria applicable to Type A Licensed Content (e.g.,
long-form content that premiered on a streaming platform) (“Type B
Licensed Content”).
the Court to the Term Sheet for its full contents.
48. SPDS gave Warner/HBO the exclusive U.S. rights to stream:

a. All long-form episodes from seasons 1 through 23 (all of which were
identified in “Exhibit A” to the 2019 Agreement);
b. The long-form documentary 6 Days to Air: The Making of South Park;
c. All Type A Licensed Content for seasons 24 through 26; and
d. Selected short-form content.
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49. SPDS gave HBO Max “the option but not the obligation”
to license Type B Licensed Content.
50. The 2019 Agreement specifically provided that

Warner/HBO’s streaming rights were “exclusive.”

51. The 2019 Agreement provided for a bargained-for blended-

rate “License Fee” of $1,687,500 for each episode of the Series
covered by the Agreement.
51. Defendants deny the allegations set forth in paragraph 51, except respectfully
refer the Court to the Term Sheet for its full contents.
52. The 2019 Agreement contained “Exhibit A,” which listed

every South Park long-form episode released at the time of the
execution of the Agreement. Each season listed consisted of at least
10 episodes.
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53. While the Parties initially agreed that HBO Max would
receive in 2020 the first episodes of the new South Park season 24,
in March 2020, SPDS informed Warner/HBO that it would not go
forward with production of season 24 as a result of the COVID
pandemic.
54. Despite the pandemic, however, SPDS proceeded to produce

other South Park content. Specifically, between September 2020
and March 2021, it produced two COVID-themed “specials”
(collectively, the “Pandemic Specials”), each of which was
approximately 50 minutes long and initially premiered on Comedy
Central. The first, The Pandemic Special, aired on September 30,
2020. The second, South Park Vaccination Special, aired on March
10, 2021.
produced “The Pandemic Special,” which aired on Comedy Central on September 30, 2020, and
“South ParQ Vaccination Special,” which aired on Comedy Central on March 10, 2021.
55. Before its release, SPDS insisted to Warner/HBO that The

Pandemic Special was not the first episode of the new season but
agreed that it was “Licensed Content” under the 2019 Agreement.
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56. However, since The Pandemic Special was approximately

50 minutes in length, the Parties also agreed to a license fee of over
$3.3 million—double the regular single-episode fee.
56. Defendants deny the allegations set forth in paragraph 56, except admit that the
Parties agreed to a license fee for the television episode “The Pandemic Special,” of over $3.3
million.
57. During this period, SPDS gave various assurances to

Warner/HBO that the season 24 episodes would be coming soon.
58. However, SPDS stated that season 24 would consist of a

series of longer “specials”—rather than the promised 10-episode
season which was more desirable and lucrative to Warner/HBO.
59. As of 2021, none of the ten 22-minute episodes for season

24 (i.e., the Type A Content) had been delivered to HBO Max under
the 2019 Agreement.
60. In January 2021, Paramount announced that it intended to

launch its own streaming platform, Paramount+.
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60. Defendants deny the allegations set forth in paragraph 60, except admit that in early
2021, Paramount Global rebranded the streaming platform it operates as Paramount+.
61. Paramount decided to make South Park a core part of its

strategy to grow Paramount+.
62. To do so, on information and belief, Paramount, SDPS, and

MTV Entertainment Studios (“MTV”), acting in concert, planned to
divert as much of the new South Park content as possible to
Paramount+ in order to boost that nascent streaming platform.
63. Indeed, in August 2021, less than six months after the launch
of Paramount+, one Paramount+ executive admitted that it intended
to use South Park “to help fuel” Paramount+ and that “[f]ranchising
marquee content like South Park . . . is at the heart of [their] strategy
to continue growing Paramount+.” But this strategy ignored—and,
indeed, expressly repudiated—Warner/HBO’s exclusive rights to
stream South Park’s new and existing episodes through June 2025.
the Court to the underlying document referenced in paragraph 63 for a true and accurate recitation
of its full contents.
64. On August 25, 2021, in furtherance of their scheme,

Paramount’s indirect subsidiary, MTV, announced a new deal with
Parker and Stone, reportedly worth more than $900 million. As
Stone publicly described it, “we have f—k you money now.”
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the Court to the underlying document referenced in paragraph 64 for a true and accurate recitation
of its full contents.
65. That deal provided, among other things, that extensive new
South Park content would premiere exclusively on Paramount+ over
the next five years—even though: (1) HBO Max had exclusive U.S.
streaming rights to all long-form South Park episodes through
season 26; (2) SPDS had the obligation to offer Warner/HBO any
Type B Licensed Content during the Term; and (3) SPDS had yet to
provide HBO Max with a single episode of South Park season 24,
having repeatedly told HBO Max that the Pandemic Specials were
not part of season 24.
the Court to the agreement referenced in paragraph 65 for its full contents.
66. Rather than honor its obligations to Warner/HBO, on

information and belief, SPDS, acting in concert with Paramount and
MTV, engaged in a campaign of verbal trickery designed to
circumvent the terms of the 2019 Agreement. To accomplish this,
Defendants used grammatical sleight-of-hand, characterizing new
content as “movies,” “films,” or “events” to side-step SPDS’s
contractual obligations.
67. Specifically, MTV publicly announced that, under the

Paramount+ deal, 14 “made-for-streaming movies” (as opposed to
“episodes” or “events”) would premiere on Paramount+, starting
with two “films” in 2021.
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67. Defendants deny the allegations set forth in paragraph 67, except admit that a press
release announced that certain “made-for-streaming movies” would premiere on Paramount+
starting in 2021.
68. On information and belief, MTV, in coordination with

Paramount and SPDS, characterized the programming that would
premiere on Paramount+ as “movies” or “films” in a calculated and
deliberate attempt to distinguish them from the Pandemic Specials
that were included as part of the Licensed Content under the 2019
Agreement.
69. Moreover, on information and belief, the 14 made-for-

television “movies” SPDS promised to Paramount+ were
substantially similar in kind to the Pandemic Specials that had been
provided to Warner/HBO as Licensed Content pursuant to the 2019
Agreement.
70. On October 27, 2021, Paramount+ and MTV issued a press

release announcing that two South Park “events” would premiere
exclusively on Paramount+.
70. Defendants deny the allegations set forth in paragraph 70, except admit that, on
October 27, 2021, a press release announced the release of two South Park made-for-streaming
movies, and respectfully refer the Court to that document for its full contents.
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71. The press release stated that the first “event,” entitled South
Park: Post COVID, would premiere on Paramount+ in the United
States on November 25, 2021, and that the second “event” would
premiere in December 2021 (collectively, the “Post-COVID
Content”).
the Court to the document referenced therein for its full contents.
72. Paramount’s announcement shocked Warner/HBO for three

reasons.
73. First, SPDS had not yet provided Warner/HBO with any
season 24 episodes.
74. Second, SPDS had told Warner/HBO in June 2021 that the
next South Park episodes it would receive would be set in the future,
post-COVID—just like the Post-COVID Content being provided
directly to Paramount+.
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75. Third, calling the Post-COVID Content “events” did not

vitiate SPDS’s obligation to first offer Warner/HBO the option to
stream that content, as it had with the Pandemic Specials.
76. Prior to the press release, SPDS had not given Warner/HBO
any notice of its plan to divert the Post-COVID Content to
Paramount+.
77. Shortly after MTV’s announcement, and after previously

telling Warner/HBO that the Pandemic Specials were not part of
season 24, SPDS reversed its position, deciding not only that the two
Pandemic Specials in fact were part of season 24, but also that they
would constitute four—not two—episodes of season 24.
77. Defendants deny the allegations set forth in paragraph 77, except admit that “The
Pandemic Special,” which aired on Comedy Central on September 30, 2020, and “South ParQ
Vaccination Special,” which aired on Comedy Central on March 10, 2021, comprised season 24
of South Park.
78. SPDS further assured Warner/HBO that it would “still get

the remaining six episodes of season 24” to be delivered in the first
quarter of 2022, thus re-affirming its recognition of Warner/HBO’s
right to receive 10 episodes of new South Park content per season.
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79. On December 8, 2021, Paramount+ and MTV issued another

press release, on information and belief at Defendant SPDS’s
direction or with its permission, announcing that yet another South
Park episode was being provided to Paramount+—making clear that
Defendants were again depriving Warner/HBO of its rights so that
it could “fuel” Paramount+.
79. Defendants deny the allegations set forth in paragraph 79, except admit that a press
release was issued on December 8, 2021 and respectfully refer the Court to the referenced press
release for its full contents.
80. Specifically, they announced that the “second of this year’s

exclusive ‘South Park’ events,” entitled South Park: Post COVID:
The Return of COVID, would premiere on Paramount+ in the United
States later that month.
the Court to the referenced press release for its full contents.
81. It had become evident that Paramount sought to use the Post-
COVID Content to boost Paramount+’s subscribership, in flagrant
disregard of Warner/HBO’s contractual rights. Moreover, on
information and belief, Paramount and SPDS deliberately
characterized the Post-COVID Content as “events” rather than
“episodes” in a disingenuous attempt to distinguish them from the
Pandemic Specials provided to Warner/HBO under the 2019
Agreement.
82. But these so-called “events” were substantially similar in

format and length to the Pandemic Specials, which SPDS had agreed
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constituted Licensed Content under the 2019 Agreement. All four

episodes featured the iconic characters from the prior 23 seasons of
South Park, addressed similar subject matter (COVID), and had
similar running times (approximately 50-60 minutes per episode).
the Court to the South Park programs referenced therein for their full contents.
83. Incredibly, this was not Defendants’ only duplicity with

respect to the Post-COVID Content. When MTV and Paramount+
announced the Post-COVID Content, they had initially
characterized the episodes as “movies.” However, when WB
pointed out that exploitation of movie sequels to South Park:
Bigger, Longer & Uncut required WB’s written consent under the
1998 Agreement, MTV, on information and belief, in coordination
with Paramount and SPDS, changed its characterization of the Post-
COVID Content from “movies” to “events.”
84. Thus, on information and belief, Defendants engaged in a

simple and obvious artifice of mischaracterizing the content to avoid
obligations under both the 2019 and 1998 Agreements.
85. SPDS’s failure to offer Warner/HBO the option to license

the Post-COVID Content for HBO Max was another clear breach of
the 2019 Agreement.
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86. Defendants’ machinations did not stop there. After

repeatedly claiming that the Pandemic Specials did not constitute
episodes of season 24 of the Series, SPDS reversed course for the
third time in January 2022 and announced that those two episodes
alone would count as the entirety of season 24, and that season 25
would consist of only six episodes—in direct violation of SPDS’s
agreement that each new season under the 2019 Agreement would
include at least 10 episodes, for a total of 30 new episodes.

87. On information and belief, this announcement was made in

concert with, or at the direction of, Paramount.
88. As of February 9, 2023, notwithstanding the clear terms of

the 2019 Agreement, SPDS had provided Warner/HBO with only
eight new South Park episodes: the two Pandemic Specials it claims
constitute the entirety of season 24 and six episodes for season 25.
88. Defendants deny the allegations set forth in paragraph 88, except admit that as of
February 9, 2023, SPDS had delivered season 24 of South Park, which consisted of two oversized
episodes that were each more than double the length of a typical television episode, and season 25
of South Park, which consisted of six episodes.
89. SPDS provided Warner/HBO with the first episode of season

26 on February 9, 2023, and the second episode of season 26 on
February 16, 2023. Prior to that, SPDS had not provided
Warner/HBO with any new South Park content since the final
episode of season 25 premiered on March 17, 2022.
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89. Defendants admit the allegations set forth in paragraph 89.
90. On information and belief, season 26 will also consist of

only six, rather than ten, episodes.
90. Defendants deny the allegations set forth in paragraph 90, except admit that season
26 of South Park consists of 6 television episodes.
91. Yet, since announcing its massive deal with Paramount+ in

August 2021, SPDS has provided Paramount+ with four supersized
South Park episodes of the same format and similar length as the
two supersized Pandemic Specials which SPDS had provided to
Warner/HBO as the entirety of season 24: the Post-COVID Content,
South Park The Streaming Wars Part 1 (“Streaming Wars Part 1”)
and South Park The Streaming Wars Part 2 (“Streaming Wars Part
2”) (collectively, the “Streaming Wars Content”), in violation of
the 2019 Agreement.
92. Moreover, pursuant to the MTV deal with Stone and Parker,
SPDS is scheduled to provide an additional 10 supersized South
Park episodes to Paramount+ over the next five years, including at
least four during the Term of the 2019 Agreement. This is a further
diversion of content to Paramount+ that should be going to
Warner/HBO, and a further dilution of the exclusivity Warner/HBO
expressly bargained for.
92. Defendants deny the allegations set forth in paragraph 92, except refer to the
agreement referenced therein for its full contents.
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93. Warner/HBO has suffered, and continues to suffer,

significant damages because of Defendants’ misconduct.
94. First, by providing Warner/HBO with fewer than half of the

promised episodes, SPDS deprived it of the ability to release new
South Park episodes over an extended period of time and drove loyal
South Park fans to a competing streaming platform.
95. Second, SPDS caused Warner/HBO to significantly overpay

for each South Park episode, since—at SPDS’s express
instruction—it calculated the blended per-episode rate based on
SDPS’s representation that it would receive 30 new episodes over
three seasons, not the mere 14 episodes that SPDS subsequently and
improperly chose to provide.
96. Third, and in contrast, since announcing its $900 million

deal with Paramount+ in August 2021, SPDS has provided
Paramount+ with four supersized South Park episodes of the same
format and similar length as the two supersized Pandemic Specials
provided to Warner/HBO as season 24: (1) the Post-COVID
Content, and (2) the Streaming Wars Content—all, in violation of
the 2019 Agreement.
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97. Finally, Paramount and SPDS have been unfairly enriched

by their own deliberate misconduct, through which, on information
and belief, they have profited at Warner/HBO’s expense.
Warner/HBO is entitled to disgorgement of the value of any profits
Defendants earned as a result of their misconduct. Had SDPS
adhered to its obligation under the 2019 Agreement, HBO Max
would have attracted even more new subscribers.
97. Paragraph 97 contains legal conclusions, as to which no response is required. To
the extent a response is required, Defendants deny the allegations set forth in paragraph 97.
98. Paramount enjoyed a sizeable increase in its subscriptions

during the quarter that the Post-COVID Content was released on
Paramount+.
Paramount+ subscriptions increased during Q4 2021.
99. For example, during Paramount’s Q4 2021 earnings call,

CEO Robert Bakish reported that the “company added 9.4 million
new streaming subscribers in Q4 alone, 80% of them on
Paramount+.” Significantly, the surge in subscribers came during
the quarter that the Post-COVID Content aired exclusively on
Paramount+.
the Court to the referenced earnings call for its full contents.
100. Paramount+ similarly experienced a huge uptick around the

time Streaming Wars Part 1 aired (June 2, 2022). Bakish reported
that “Paramount+ [had] added 4.9 million global subscribers,”
touting Paramount+’s status “as one of the fastest growing premium
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streaming services” and attributing its growth to “strong

performances. . . [including by] . . . our latest South Park special,
South Park The Streaming Wars.”7
101. Following the release of Streaming Wars Part 2 (July 3,

2022), Bakish told investors that in Q3, Paramount+ had gained
another 4.6 million global subscribers, for a total of 46 million
subscribers and that year-over-year revenue for Paramount+ had
grown by 95%.
102. These reports further demonstrate that Paramount has earned

massive profits—to Warner/HBO’s detriment—from the release of
South Park on Paramount+.
103. As a result of Defendants’ misconduct, Warner/HBO has

incurred, and continues to incur, damages in excess of $200 million
dollars.
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FIRST CAUSE OF ACTION

BREACH OF CONTRACT
(Against SPDS)
104. Warner/HBO incorporates by reference paragraphs 1–103 as

if fully set forth herein
104. Defendants incorporate their responses to the allegations, as set forth above, as if
fully set forth herein.
105. The 2019 Agreement between Warner/HBO and SPDS is a

valid and enforceable contract.
Notwithstanding, Defendants admit that the 2019 Agreement between Warner/HBO and SPDS is
a valid and enforceable agreement.
106. Warner/HBO has performed its obligations under the 2019

Agreement in all material aspects.
the extent a response is required, Defendants deny the allegations.
107. SPDS breached the 2019 Agreement, which grants

Warner/HBO the exclusive right and license to make seasons 24
through 26 of the Series available on HBO Max via streaming and
temporary download, by diverting and licensing episodes of the
Series to Paramount+.
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108. SPDS breached the 2019 Agreement by failing to offer

Warner/HBO the right to license the Post-COVID Content and
Streaming Wars Content.
109. SPDS breached the 2019 Agreement by providing

Warner/HBO with fewer than 10 episodes for each of seasons 24
and 25 of the Series, and on information and belief, for season 26 of
the Series.
110. SPDS’s breaches directly and proximately caused

Warner/HBO to be damaged in an amount to be proven at trial.
SECOND CAUSE OF ACTION

BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
(Against SPDS)

if fully set forth herein.
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112. By virtue of their dealings, SPDS and Warner/HBO assumed

a relationship of trust and confidence.
113. SPDS had a duty to act fairly and in good faith and to do
nothing that would have the effect of destroying, interfering,
frustrating, or injuring the rights of Warner/HBO to receive the
benefits of the 2019 Agreement.

114. SPDS breached the implied covenant of good faith and fair
dealing by engaging in a course of conduct that did and was intended
to deprive Warner/HBO of its rights under the 2019 Agreement.
SPDS has, among other things, destroyed, interfered with,
frustrated, and injured Warner/HBO’s rights by diverting and
licensing South Park episodes to Paramount+, failing to offer
Warner/HBO the right to license the Post-COVID Content and the
Streaming Wars Content, and providing Warner/HBO with fewer
than 10 episodes for each of seasons 24 and 25 of the Series, and, on
information and belief, season 26 of the Series.
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115. As a direct and proximate result of SPDS’s breach of the

implied covenant of good faith and fair dealing under the 2019
Agreement, Warner/HBO has been injured and damaged in an
amount to be proven at trial.
THIRD CAUSE OF ACTION

DECEPTIVE PRACTICES IN VIOLATION OF GBL § 349
(Against SPDS, Paramount, and MTV)
116. Warner/HBO repeats and realleges the allegations in

paragraphs 1–103 as if fully set forth herein.
117. Defendants’ marketing and sale of streaming subscriptions

constitutes consumer-oriented conduct.
118. By virtue of the conduct alleged above, Defendants have

engaged in acts and practices that were materially deceptive and
have resulted in consumer injury and broad adverse impact on the
public at large.
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119. On information and belief, Defendants’ conduct was willful

and intentional, and intended to unfairly compete against
Warner/HBO, divert its subscribers to Paramount+, steal its
valuable streaming rights, and entice its advertisers.
120. On information and belief, Defendants’ conduct also had a

significant consumer-facing impact, causing substantial confusion
over which streaming platform had “exclusive” rights to South Park
and necessitating that consumers purchase streaming subscriptions
from Paramount+ when they already believed such exclusivity
resided with HBO Max.
121. As a result of Defendants’ unlawful acts, including but not

limited to conducting economic activity in a deceitful and anti-
competitive manner, consumers have been harmed.
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122. As a result of Defendants’ unlawful acts, Warner/HBO has

suffered injury to its reputation, as well as monetary damages,
including but not limited to lost advertising revenue, in an amount
to be determined at trial.
123. Defendants’ conduct, as described above, warrant the award

of attorneys’ fees to Warner/HBO.
FOURTH CAUSE OF ACTION

TORTIOUS INTERFERENCE WITH CONTRACT
(Against Paramount and MTV)

125. Warner/HBO has a valid agreement with SPDS, which

grants it the exclusive right and license to make the 24th through
26th seasons of the Series available on Warner/HBO’s HBO Max
video on-demand streaming platform.
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125. Defendants admit that South Park Digital Studios LLC and WarnerMedia Direct,
LLC entered into the Term Sheet, and refer to the agreement for its full contents.
126. Paramount and MTV had and has full knowledge of

Warner/HBO’s 2019 Agreement with SPDS.
127. Based on information and belief, as well as the facts recited

herein, Paramount and MTV maliciously and intentionally induced
SPDS to breach its Agreement with Warner/HBO. As a result of
Paramount’s actions, SPDS breached the Agreement repeatedly,
including by (1) failing to offer Warner/HBO the right to license the
South Park Post-COVID Content and the Streaming Wars Content;
(2) providing Warner/HBO with fewer than 10 episodes for each of
seasons 24 and 25 of the Series; and, on information and belief,
season 26 of the Series; and (3) diverting and licensing South Park
episodes to Paramount+.
128. Paramount and MTV had and has no lawful justification for
its tortious interference with Warner/HBO’s Agreement with SPDS.
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129. Paramount and MTV acted wrongfully and employed

improper means because their purpose in interfering with the
contract was to appropriate the benefits of Warner/HBO’s
Agreement with SPDS.
130. Paramount and MTV acted maliciously and with wanton

disregard for Warner/HBO’s rights.
131. As a result of Paramount and MTV’s tortious interference

with Warner/HBO’s Agreement with SPDS, Warner/HBO has
suffered and will continue to suffer irreparable harm, as well as
significant monetary damages to be determined at trial.
FIFTH CAUSE OF ACTION

UNJUST ENRICHMENT
(Against Paramount and MTV)

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133. Paramount and MTV have enjoyed substantial revenue

through advertising and gaining subscribers as a result of
Paramount+’s streaming of South Park content.
Paramount Global and its subsidiaries have earned advertising and subscriber revenue in
connection with the streaming of content on Paramount+.
134. This benefit was obtained at Warner/HBO’s expense, as

Warner/HBO invested hundreds of millions to secure the exclusive
right to stream the Licensed Content in order to gain revenue
through, but not limited to, advertising and new subscribers.
135. It would be against equity and good conscience to permit

Paramount and MTV to retain any profits from their misconduct.
136. By reason of the foregoing, Warner/HBO has incurred

damages, the total amount of which will be proven at trial.
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PRAYER FOR RELIEF
Defendants deny all allegations in the prayer for relief.
AFFIRMATIVE DEFENSES
FIRST AFFIRMATIVE DEFENSE

(Failure to State a Claim)
137. The Complaint fails to state a cause of action upon which relief can be granted.
Among other reasons, the cause of action for deceptive practices under § 349 of the General
Business Law (“GBL”) fails, on its face, in the absence of any consumer-oriented or misleading
conduct, or any injury to consumers or the public interest. In addition, the cause of action for
breach of the implied covenant fails, on its face, because it is entirely duplicative of the cause of
action for breach of contract.
SECOND AFFIRMATIVE DEFENSE

(Prior Breach)
138. Plaintiff’s claims and causes of action are barred, in whole or in part, by the doctrine
of prior breach.
THIRD AFFIRMATIVE DEFENSE

(Parol Evidence)
139. Plaintiff’s claims and causes of action are barred, in whole or in part, by the terms
of the applicable contract and the parol evidence rule, which precludes the admissibility of
extrinsic evidence that vary the terms of the contract.
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FOURTH AFFIRMATIVE DEFENSE

(Frustration of Purpose)
of frustration of purpose.
FIFTH AFFIRMATIVE DEFENSE

(Impossibility and/or Impracticability)
141. Plaintiff’s claims and causes of action are barred, in whole or in part, by the
doctrines of impossibility or impracticability of performance.
SIXTH AFFIRMATIVE DEFENSE

(Force Majeure)
of force majeure.
SEVENTH AFFIRMATIVE DEFENSE

(First Amendment)
143. Plaintiff’s claims and causes of action are barred, in whole or in part, by
Defendants’ First Amendment rights.
EIGHTH AFFIRMATIVE DEFENSE

(Preemption)
of preemption.
NINTH AFFIRMATIVE DEFENSE

(Waiver)
of waiver.
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TENTH AFFIRMATIVE DEFENSE

(Estoppel)
of estoppel.
ELEVENTH AFFIRMATIVE DEFENSE

(Consent and/or Acquiescence)
147. Plaintiff’s claims and causes of action are barred, in whole or in part, by the
doctrines of consent or acquiescence.
TWELFTH AFFIRMATIVE DEFENSE

(Unclean Hands)
of unclean hands.
THIRTEENTH AFFIRMATIVE DEFENSE

(Ratification)
149. Plaintiff’s claims and causes of action are barred, in whole or in part, by its
ratification.
FOURTEENTH AFFIRMATIVE DEFENSE

(Offset and/or Setoff)
150. Plaintiff’s recovery of damages, if any, must be reduced in accordance with the
doctrines of offset or setoff.
FIFTEENTH AFFIRMATIVE DEFENSE

(Substantial Performance)
151. Plaintiff’s claims and causes of action are barred, in whole or in part, because South
Park Studios has completely or substantially performed all of its obligations under the applicable
contract.
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SIXTEENTH AFFIRMATIVE DEFENSE

(Unjust Enrichment)
of unjust enrichment.
SEVENTEENTH AFFIRMATIVE DEFENSE

(Laches)
of laches.
COUNTERCLAIMS
1. In 2019, two highly-sophisticated entertainment companies—WarnerMedia Direct,
LLC and South Park Digital Studios, LLC—entered into a license agreement by which
WarnerMedia licensed the rights to stream more than 300 episodes of the iconic television series
South Park on its affiliated platform, HBO Max. These sophisticated parties, whose related
companies have done numerous licensing deals together, documented the exact contours of their
respective rights and obligations to license and pay for the content in a written Term Sheet.
2. South Park Studios has abided by the terms of the written Term Sheet.
WarnerMedia has not. Instead, despite continuously exploiting and profiting from the 300-plus
episodes of South Park that it still has available for streaming on HBO Max, WarnerMedia is
refusing to pay tens of millions of dollars in license fees owed to South Park Studios for the right
to exploit that content. To purportedly justify its non-payment, WarnerMedia has accused South
Park Studios of breaching certain alleged obligations in the Term Sheet. But, as detailed below,
those alleged obligations simply do not exist in the Term Sheet, or otherwise. As such,
WarnerMedia’s excuses for failing to pay the required license fees, as well as its affirmative
claims, are precluded by the plain terms of the parties’ agreement.
3. The terms of the parties’ deal were simple. Under the Term Sheet, dated as of
October 22, 2019, South Park Studios agreed to license to WarnerMedia the streaming rights to
the following specifically-enumerated content: (i) the existing library of over 300 television
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episodes, each 22 minutes in length, which comprise Seasons 1 to 23 of the South Park series; (ii)
the forthcoming television episodes that would make up Seasons 24 to 26 of the South Park series,
provided the episodes first aired on a cable or major broadcast network, such as Comedy Central
(the long-time home of the South Park television series); (iii) specified short-form content related
to such television episodes, such as behind-the-scenes footage; and (iv) one 2011 made-for-
television documentary titled 6 Days to Air: The Making of South Park. The Term Sheet made
clear that the rights to any South Park content not expressly licensed in the foregoing grants would
be exclusively retained and available to exploit by South Park Studios.
4. Notably, the Term Sheet did not specify any minimum required number of episodes
for the forthcoming Seasons 24-26.
5. The parties agreed that WarnerMedia would pay an episodic license fee of
$1,687,500 for each of the 300-plus existing episodes, as well as a reduced, prorated episodic
license fee (which would decrease the $1,687,500 base license fee in proportion to the time the
episode was available to license during the five-year license term) for each new, still-to-come
episodes in Seasons 24 to 26. The parties also agreed that the episodic license fees would be
payable in four quarterly installment payments each year throughout the five-year license period.
6. South Park Studios held up its end of the bargain. It delivered the 300-plus library
episodes of South Park, the one made-for-television documentary, and the specified short-form
content at the start of the five-year license period. South Park Studios then delivered each new
episode of Seasons 24 to 26, as each became available following its premiere on Comedy Central,
precisely as required by the Term Sheet. Indeed, despite its production capabilities being nearly
debilitated by the COVID-19 pandemic, and the growing desire of the South Park co-creators to
experiment with other lengths and formats for entertainment content, South Park Studios delivered
the equivalent of more than 4 television episodes for Season 24, delivered 6 television episodes
for Season 25, and delivered another 6 television episodes for Season 26.
7. Despite receiving all of the content required under the Term Sheet, WarnerMedia
apparently began to regret the actual terms of the deal it made. Specifically, WarnerMedia started
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insisting that the Term Sheet, despite its plain language to the contrary, (i) included a requirement
that South Park Studios produce and deliver a minimum of 10 episodes each for Seasons 24 to 26,
and (ii) granted WarnerMedia the exclusive right to license “made-for-streaming” movies that
South Park Studios produced. But WarnerMedia did not negotiate for or secure either of these
terms. Indeed, unlike other streaming platforms involved in the bidding for the rights to the South
Park television episodes in 2019, WarnerMedia did not seek to include a required minimum
number of episodes for Seasons 24 to 26 in the Term Sheet. Likewise, WarnerMedia never sought,
and certainly did not obtain, the right to license any “made-for-streaming” movies in the Term
Sheet. And for good reason. South Park Studios would not have agreed to license any “made-for-
streaming” movie rights on the same terms as, and certainly not for the price of, an episode of the
television series.
8. WarnerMedia then began accusing South Park Studios of breaching the Term Sheet
by failing to comply with these nonexistent terms. When South Park Studios did not give in to the
baseless demands that South Park Studios deliver new television episodes that did not even exist
and made-for-streaming movies that WarnerMedia has no right to license, WarnerMedia decided
to withhold payment of the license fees for the content it had actually licensed and was exploiting.
WarnerMedia refused to pay more than $26 million in license fees that came due in December
2022. Then, after filing its Complaint in this action, WarnerMedia refused to pay more than $26
million in additional license fees that came due on March 31, 2023. Further, by its actions,
WarnerMedia has indicated that it will not pay any of the $225+ million in license fees still owed
for the rest of the five-year term of the Term Sheet unless and until South Park Studios produces
and delivers an additional 14 episodes of Seasons 24 to 26 that do not exist and delivers certain
“made-for-streaming” movies that South Park Studios produced for another streaming platform.
9. Despite WarnerMedia’s refusal to pay more than $52 million in license fees already
owed, WarnerMedia continues to stream on HBO Max the 318 episodes of the South Park
television series that make up Seasons 1 to 26, along with the made-for-television documentary
titled 6 Days to Air: The Making of South Park.
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10. WarnerMedia’s wholesale refusal to pay for any of the South Park content it admits
it has received and is continuing to exploit constitutes a clear and knowing breach of its obligations
under the Term Sheet.
11. As an initial matter, because the license fees owed by WarnerMedia are calculated
on a per-episode basis—that is, based on South Park episodes that have been delivered—the
license fees WarnerMedia is refusing to pay are for content that WarnerMedia indisputably
received and is continuing to exploit through the present day. WarnerMedia is continuing to stream
on its HBO Max platform all 302 library episodes, whose collective value makes up the vast
majority of the total license fees due under the Term Sheet, the made-for-television documentary
and other short-form content required by the Term Sheet, and now the 16 episodes that comprise
Seasons 24 to 26. WarnerMedia is refusing to pay the episodic license fee that applies to each of
these delivered episodes.
12. Although WarnerMedia claims that it should have received 14 more episodes (i.e.,
6 more episodes for Season 24 and 4 more episodes each for Seasons 25 and 26), it had not been
charged for any episodes not actually delivered. In other words, WarnerMedia is not complaining
about “missing” content that it paid for. Indeed, recognizing the uncertainty of how many episodes
would be delivered for Seasons 24 to 26, the Term Sheet provides that WarnerMedia owes nothing
for an episode until it has been delivered and made available for streaming on HBO Max.
13. Nor is the purported shortfall of 14 episodes material when compared to the 318
episodes and other licensed content that WarnerMedia has received. 14 episodes represents less
than 4 percent of the total content WarnerMedia claims it is entitled to under the Term Sheet. Thus,
even by its own calculation, WarnerMedia has received 96 percent of the total content it believes
it is owed under the Term Sheet. A nominal shortfall of 4 percent of the content WarnerMedia
(wrongly) believes it is entitled to under the Term Sheet is hardly grounds to refuse to pay more
than $52 million in license fees currently owed to South Park Studios, or to repudiate all future
payment obligations, for the indisputably valuable content it continues to exploit on HBO Max.
14. WarnerMedia has no basis to withhold the episodic license fee that applies to each
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of (i) the 302 library episodes, which it received as of June 24, 2020, and which it continues to
exploit through the present day; (ii) the 2011 made-for-television documentary, which it received
as of June 24, 2020, and which it continues to exploit through the present day; (iii) the 16 additional
episodes comprising Seasons 24 to 26, each of which was available to stream on HBO Max the
day after its debut on Comedy Central and which it continues to exploit through the present day.
15. Through this Counterclaim, South Park Studios seeks to recover all of the unpaid
license fees, totaling more than $52 million to date, based upon WarnerMedia’s blatant breaches
of the Term Sheet. In addition, based on WarnerMedia’s material breaches of contract, and its
indications that it will continue to withhold the $225+ million in license fees still owed for the rest
of the five-year term, South Park Studios is entitled to a declaratory judgment confirming the
parties’ rights and obligations under the Term Sheet.
FACTUAL BACKGROUND
The South Park Television Series.
16. South Park is an immensely popular animated television series created by Trey
Parker and Matt Stone. The South Park television series centers on the lives of four fictional
children—Stan Marsh, Eric Cartman, Kyle Broflovski, and Kenny McCormick—who live and go
to school in the show’s titular Colorado town. Since its debut on the cable network Comedy
Central in 1997, South Park has become the high-water mark for animated television comedy.
17. From 2008 until 2013, each television episode of the South Park series was made
available for free, on-demand streaming on the official South Park Studios website, for a one-week
window following its debut on the Comedy Central cable network.
South Park Studios And WarnerMedia Enter Into The Term Sheet.
18. From 2014 to 2020, South Park Studios licensed the streaming rights to South Park
television episodes to Hulu’s premium service, Hulu Plus. When the Hulu streaming deal was
nearing an end, a bidding war for the right to license the South Park television episodes ensued
among various steaming platforms.
19. WarnerMedia ultimately prevailed in the bidding. WarnerMedia and South Park
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Studios thus entered into a written Term Sheet dated October 22, 2019, and amended as of August
7, 2020, to delineate the exact scope and terms of the license.
20. Pursuant to the Term Sheet, South Park Studios licensed to WarnerMedia the
following rights:
(a) All long-form television episodes from the preexisting Seasons 1 to 22 of the
South Park television series (defined as the “S1-22 Episodes”);
(b) All long-form television episodes from the current Season 23 of the South Park
television series (defined as the “S23 Episodes”);
(c) All long-form television episodes from the forthcoming Seasons 24 to 26 of the
South Park television series (defined as the “S24-26 Episodes”), “provided that
each episode in the applicable season of the S24-26 Episodes premieres on a
Licensor (or Licensor affiliate) owned or controlled (i) Nielsen-rated basic cable
network or (ii) major broadcast network, in Licensor’s sole discretion during the
Term”;
(d) Specified short-form content (i.e., clips, trailers, teasers, outtakes, behind-the-
scenes, bonus content, making-ofs, DVD materials, promos, and marketing
materials) related to the licensed television episodes; and
(e) One made-for-television, live-action documentary from 2011 titled 6 Days to
Air: The Making of South Park.
21. In the event that a “S24-S26 Episode” did not premiere on a basic cable or major
broadcast network owned by or affiliated with South Park Studios, the Term Sheet provided that
WarnerMedia would have the option to license that episode.
22. The five-year term of the license period for all existing television episodes
comprising Seasons 1 to 23 began on June 24, 2020. For forthcoming episodes of Seasons 24 to
26, each new episode would be available to stream on HBO Max the day after the episode’s
premiere via linear television distribution. The term of the license period for all such licensed
content is set to expire on June 23, 2025.
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23. As made clear by the explicit list of grants, the scope of the Term Sheet was
specifically limited to “Episodes” of Seasons 1-26 of the South Park television series; related
“short-form content” like short clips and bonus content; and exactly one made-for-television
documentary titled, 6 Days to Air: The Making of South Park.
24. The Term Sheet was equally certain about what rights South Park Studios had not
licensed to WarnerMedia, stating that “[e]xcept for the rights expressly granted hereunder,” SPDS
would retain “the full, perpetual, unlimited, exclusive right to exhibit, distribute, transmit,
advertise, market, promote and otherwise exploit [South Park] and all allied and ancillary rights
therein of any kind, in all forms of media, on all platforms, and by all means, throughout the
world.”
25. That reservation of rights meant that South Park Studios withheld and expressly
retained for itself the right to exploit or license to another party the streaming rights to all other
content not specifically enumerated in the Term Sheet, including the streaming rights to any
“made-for-streaming” movies based on the South Park property, which was an equally obvious
category of content that could have been, but deliberately was not, included in the grant of rights.
26. WarnerMedia’s approach to the negotiations of the Term Sheet was different than
other streaming outlets that sought to bid for the same streaming rights. Unlike other streaming
outlets who bid for the valuable license to stream the South Park television series, WarnerMedia
did not seek to include in the Term Sheet an episodic minimum number of episodes in Seasons 24
to 26. Likewise, WarnerMedia never once proposed that the Term Sheet include a right for
WarnerMedia to license any “made-for-streaming” movies, which would have required a
separately negotiated license fee specific to that content.
27. Thus, as reflected in the Term Sheet, WarnerMedia sought and acquired the
streaming rights to exactly one identified made-for-television documentary titled 6 Days to Air:
The Making of South Park; the over 300 library television episodes in existence; new television
episodes constituting Seasons 24 to 26; certain related short-form content—and nothing more.
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South Park Studios Fully Delivers All Library Episodes, The 2011 Documentary, and The
Short-Form Content.
28. On or around June 24, 2020, South Park Studios delivered the 300-plus existing
television episodes of the South Park television series, the specified short-form content, and the
2011 made-for-television documentary 6 Days to Air: The Making of South Park to WarnerMedia.
29. On information and belief, all of the delivered content was made immediately
available by WarnerMedia for streaming on HBO Max and still remains available for streaming
on HBO Max through the present day.
30. On August 7, 2020, the parties entered into an amendment to the Term Sheet to
address changes to the branding and marketing obligations and to add exceptions to the
confidentiality provision. The parties made no other changes to the Term Sheet. In particular, the
parties did not amend the Term Sheet to include any episodic minimum for the upcoming Seasons
24 to 26 of the television series. And once again, the parties did not include any right or obligation
to license any made-for-streaming movies.
The COVID-19 Pandemic Upends The Production Of Season 24 Of South Park.
31. Before South Park Studios could begin the production of new episodes for Season
24 of South Park, the entire world was upended by the COVID-19 pandemic.
32. Because of the closure of the production studio during the early months of the
pandemic, and the physical distance separating the creative team (including the co-writers,
animators, art and sound coordinators, voice actors, and other production staff), who were each
working out of his or her own personal residences, the logistical impediments to the process of
conceptualizing and executing new South Park content during the pandemic were unprecedented.
33. Unlike prior seasons, during which a team of approximately seventy people was
famously known to churn out a 22-minute episode of South Park by working together non-stop for
six consecutive days at the production studio, new South Park content conceived of during the
pandemic had to come together very differently. Given the health and safety and logistical
challenges posed by the COVID-19 pandemic, South Park Studios was forced to expend millions
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of dollars on remote technologies and equipment to try to enable the makeshift production of South
Park content from home.
34. Although the production capabilities were severely impaired, the creative juices
were overflowing—there was so much to say, and so many scathing sociopolitical observations to
make, about the ongoing COVID-19 pandemic. The new South Park content conceived of and
created by the pandemic-challenged team was the aptly-titled “The Pandemic Special”—an
overlong, overstuffed television episode that came out to be 48-minutes long (more than double
the length of the typical 22-minute television episode).
35. “The Pandemic Special” television episode aired on Comedy Central on September
30, 2020, to record-breaking viewership numbers. It was delivered to WarnerMedia, and made
available for streaming on HBO Max the day after it aired on Comedy Central as part of “Season
24” of the South Park series, pursuant to the Term Sheet.
36. After completing “The Pandemic Special,” the South Park team could not proceed,
as they had in the past, to produce more South Park episodes in the same fast-paced, dynamic, and
team-oriented environment that existed at the production studio pre-pandemic. As noted, it would
have been impossible, operating under the current health and safety guidelines, for the South Park
team to live together for weeks on end, working around-the-clock at the production studio, to
produce multiple television episodes in rapid succession.
37. Instead, as time continued to pass with no end to the pandemic in sight, the South
Park team decided it had no choice but to close out Season 24 with another oversized television
episode. Once again, the South Park team labored through the far-from-ideal circumstances
created by the COVID-pandemic to produce a second television special episode. The resulting
product was another ultra-topical “South ParQ Vaccination Special,” a 47-minute-long television
episode.
38. Like the mega-popular “The Pandemic Special” that came before it, the “South
ParQ Vaccination Special” drew record-breaking viewership numbers on Comedy Central and
became cable’s top telecast among young adults that year. As with “The Pandemic Special” before
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it, one day after its broadcast on Comedy Central on March 10, 2021, the “South ParQ Vaccination
Special” was delivered to WarnerMedia and made available for streaming on HBO Max the next
day, pursuant to the Term Sheet.
39. Thus, with the delivery of the “South ParQ Vaccination Special,” South Park
Studios communicated to WarnerMedia that it had completed its delivery of the pandemic-
interrupted Season 24. WarnerMedia agreed to pay a license fee equivalent to four regular-length
television episodes for Season 24.
40. Though the two installments of Season 24 had a combined runtime that equaled
approximately 4.3 standard-length television episodes, neither Comedy Central and WarnerMedia
could complain about receiving new South Park content in the middle of a pandemic, when the
production of any new content, of any format or length, had been near-impossible to pull off.
41. South Park Studios also believed that WarnerMedia would be particularly
understanding of the limitations forced by COVID-19, which had caused WarnerMedia and HBO
Max to severely and very publicly alter their own distribution strategies and shut down or reduce
production of original content during the pandemic.
42. As expected, despite the abnormality of the completed Season 24—which consisted
of only the “The Pandemic Special” and the “South ParQ Vaccination Special” episodes—
WarnerMedia was apparently happy to receive any content at all. WarnerMedia agreed to pay a
license fee equivalent to four regular-length television episodes and made “Season 24” available
to stream on HBO Max.
43. In the meantime, to WarnerMedia’s great fortune, the value of the existing 300-plus
library episodes unexpectedly skyrocketed, as the viewing public became captive at home under
stay-at-home orders and viewership of streaming content exploded.
South Park Studios Completes Delivery Of Season 25.
44. In January 2022, Comedy Central announced the upcoming Season 25 of South
Park would consist of six new television episodes, which would debut on Comedy Central
beginning on February 2, 2022, and then (in accordance with the Term Sheet) become available to
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stream on HBO Max the next day.
45. With the health and safety restrictions from the COVID-19 pandemic relaxing, the
creative team returned to the normal grind of producing television episodes, with each of the
standalone episodes in Season 25 conceived of and produced in the six days preceding its broadcast
date on Comedy Central.
46. After each of the Season 25 episodes debuted on Comedy Central, South Park
Studios delivered each of them to WarnerMedia to upload and make available on HBO Max the
next day, in fulfillment of the Term Sheet requirements for Season 25.
47. To this day, WarnerMedia has continued to exploit all 6 episodes of Season 25 by
making them available for streaming as “Season 25” of the series on HBO Max.
South Park Studios Completes Delivery Of Season 26.
48. In January 2023, Season 26 of South Park was given its official premiere date of
February 8, 2023.
49. Like Season 25, Season 26 consisted of 6 television episodes. All 6 episodes
comprising Season 26 premiered on Comedy Central and were delivered to WarnerMedia for
streaming the next day on HBO Max.
50. To this day, WarnerMedia has continued to exploit all 6 of the delivered episodes
by making them available for streaming as “Season 26” of the series on HBO Max.
WarnerMedia Refuses To Pay The License Fees In Breach Of The Term Sheet.
51. In the Term Sheet, WarnerMedia and South Park Studios agreed that the license fee
for each “SP Episode” would be $1,687,500. Payment for each episode would commence upon
delivery of that episode to HBO Max and would be paid out quarterly over the remaining term of
the deal.
52. For the 300-plus library South Park episodes and the made-for-television
documentary that were delivered to WarnerMedia immediately at the start of the license term on
June 24, 2020, the parties agreed that $1,687,500 was an appropriate license fee because
WarnerMedia could exploit that content for up to five years.
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53. With respect to the new episodes comprising Seasons 24 to 26, the parties agreed
that there would be a reduced license fee, “prorated separately for each applicable SP Episode,
calculated by multiplying the License Fee by a fraction, the numerator of which shall be the
number of days in the applicable License Period for such SP Episode, and the denominator of
which shall equal the number of days in the License Period for the S1-23 Episodes.”
54. In the event that an episode of South Park was withdrawn from the license, the
Term Sheet confirmed that South Park Studios would simply “pay or credit to [WarnerMedia] a
prorated withdrawal payment/credit, calculated by multiplying the License Fee for such SP
Episode by a fraction, the numerator of which shall equal the number of days remaining in the
applicable License Period for such SP Episode and the denominator of which shall equal the total
number of days in such SP Episode’s License Period.”
55. Despite receiving all of the content it is entitled to under the clear grant of rights
outlined in the Term Sheet, WarnerMedia has failed to pay more than $26 million on December
31, 2022, and more than $26 million on March 31, 2023. By simply refusing to pay ongoing
license fees, WarnerMedia has made it clear that it intends not to make any future license fee
payments under the Term Sheet unless it gets the content it claims to be owed.
56. It is indisputable that WarnerMedia has received and is continuing to exploit, to
this day, all 300-plus library episodes; the only made-for-television documentary title it contracted
for; and every single episode of Seasons 24 to 26. It is likewise indisputable that the license fees
that WarnerMedia has refused to pay are for the foregoing content, which it indisputably received
and has exploited from the time of receipt through the present day.
57. In refusing to pay the license fees due in December 2022 and March 2023, however,
WarnerMedia has concocted an argument that the Term Sheet contained two game-changing
contractual terms (found nowhere in the four corners of the Term Sheet), which South Park Studios
had purportedly breached: (i) a minimum requirement of 10 episodes for each of Seasons 24 to
26; and (ii) WarnerMedia’s right to license any made-for-streaming movies produced for a
streaming platform for the same license fee as a South Park series episode.
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58. The plain terms of the Term Sheet confirm that neither of these terms exist.
59. The Term Sheet reflects no episodic commitment whatsoever for the new seasons
of South Park. If anything, the Term Sheet reflects the opposite: a pricing structure designed to
permit South Park Studios the freedom to vary the number of television episodes it produced in
any upcoming season and designed to protect WarnerMedia by providing that the license fee to be
paid is based only on episodes delivered.
60. The Term Sheet likewise reflects no term that could require South Park Studios to
offer to license to WarnerMedia the rights to any made-for-streaming movies developed outside
the television seasons. The Term Sheet lists, in exhaustive form, the content that is within the
grant of rights; made-for-streaming movies simply does not appear on that list.
61. Moreover, even assuming WarnerMedia is correct that the Term Sheet contains a
10-episode minimum for Seasons 24 to 26 (it is not), the total “missing” content amounts to 14 out
of 332 total episodes, or a mere 4-percent of the total licensed content. WarnerMedia, under its
own theory of a breach by South Park Studios, has no valid excuse for refusing to pay the license
fees that are contractually owed for the 96-percent of the content it admits it has received and
continues to exploit.
62. WarnerMedia also has hinted that it may attempt to assert that it is not in breach of
any payment obligations under the Term Sheet, because it informed Paramount Global that it
planned to withhold these payments in December 2022. In particular, WarnerMedia has begun to
construct, in certain recent correspondence Paramount Global, a narrative claiming that
discussions in December 2022 resulted in an arrangement by which each side could pause and
defer certain contractual payments otherwise due and owing to the other under unrelated
agreements.
63. There is no such mutually agreed arrangement. To the contrary, WarnerMedia
simply announced in December 2022, unilaterally and without any sign-off by South Park Studios
or Paramount Global, that it had decided to withhold the payments due and owing under the Term
Sheet, for an unspecified duration of time while this dispute played out. Defendants never agreed
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that would be okay. Neither South Park Studios nor Paramount Global ever indicated, through
any words or through conduct, that it would tolerate or view the non-payments by WarnerMedia
as anything other than an outright breach of the Term Sheet.2
64. Further, WarnerMedia has given clear indications that it will not pay any of the
remaining $225+ million in license fees still owed for the rest of the five-year term of the Term
Sheet. Paramount Global certainly has not agreed that WarnerMedia can continue to disregard its
contractual obligations in this manner.
65. WarnerMedia’s obligations to timely make all the payments owed under the Term
Sheet are live and ongoing, not subject to any agreed-upon abeyance or deferral, and completely
unaffected by the fact that WarnerMedia had previously advised South Park Studios, back in
December 2022, of its desire to withhold these payments.
66. WarnerMedia is required to pay South Park Studios more than $52 million in
overdue payments under the Term Sheet and it is without any excuse for failing to do so.
WarnerMedia is also required to continue to make all future payments under the Term Sheet as
they come due, on a quarterly basis.
COUNT I – BREACH OF CONTRACT

67. South Park Studios re-alleges and incorporates by reference paragraphs 1 through
66 as though fully set forth herein.
68. The parties entered into the Term Sheet as of October 22, 2019, which, at all
relevant times, has been binding and enforceable.
2
In response to WarnerMedia’s unilateral decision to refuse to pay more than $52 million in
license fees owed thus far under the Term Sheet, the parties agreed that Paramount Global
would withhold an equal amount from payments that were otherwise owed pursuant to
different deals between the parties’ related entities, until WarnerMedia pays what is owed
under the Term Sheet. However, Paramount Global never agreed that WarnerMedia was
entitled to withhold any payments in the first place, and it has always been Paramount Global’s
position that the parties should simply comply with their contractual obligations—i.e.,
WarnerMedia should pay all amounts owed under the Term Sheet, in which case Paramount
Global and its affiliates will pay all equivalent amounts owed to WarnerMedia and its affiliates.
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69. South Park Studios has performed its obligations under the Term Sheet.
70. WarnerMedia’s performance of its payment obligations has not been excused.
71. Nonetheless, WarnerMedia has breached its obligations under the Term Sheet,
including by, among other things, failing to remit the license fees due and owing as of December
2022 and March 2023.
72. South Park Studios has suffered damages in an amount yet to be determined, but in
all events exceeding $52 million to date, as a direct result of WarnerMedia’s breaches of the Term
Sheet.
COUNT II – DECLARATORY JUDGMENT
73. South Park Studios re-alleges and incorporates by reference paragraphs 1 through
72 as though fully set forth herein.
74. South Park Studios seeks a declaratory judgment to resolve questions concerning
the respective rights, obligations, and duties of the parties under the Term Sheet, including with
respect to (i) WarnerMedia’s refusal to pay quarterly license fees for the South Park content it has
received and continues to exploit and (ii) its assertion that it is entitled to suspend and/or defer its
payment obligations going forward due to a purported arrangement it claims was made between
the parties in December 2022—an assertion that South Park Studios vigorously disputes.
75. An actual case or justiciable controversy exists between the parties concerning
WarnerMedia’s refusal to pay the agreed-upon license fees and its purported entitlement to
suspend or defer its payment obligations under the Term Sheet.
76. The issuance of declaratory relief by this Court will terminate some or all of the
existing controversy between the parties and will provide certainty to the parties with respect to
their rights and obligations under the Term Sheet.
77. By reason of the foregoing, South Park Studios is entitled to a declaratory judgment
establishing the rights and obligations of the parties, including WarnerMedia’s obligation to pay
the license fees set forth in the Term Sheet and the validity of WarnerMedia’s purported reasons
for nonpayment.
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78. South Park Studios therefore requests a declaration by this Court that it is entitled
to receive payments of license fees in accordance with the schedule required by the Term Sheet,
notwithstanding WarnerMedia’s belief that an arrangement or defer and/or suspend such payments
exists.
PRAYER FOR RELIEF
WHEREFORE, South Park Studios prays for judgment as follows:

1. For judgment in favor of South Park Studios and against WarnerMedia on all causes
of action;
2. For actual and compensatory damages in an amount to be proven at trial;
3. For a judgment declaring that WarnerMedia’s obligations to make payments under
the Term Sheet are not suspended or excused, and its failure to make payments are in breach of
the Term Sheet;
4. For any reasonable attorneys’ fees, costs, disbursements, and other expenses
recoverable by South Park Studios, in an amount according to proof;
5. For pre- and post-judgment interest thereon at the applicable rate under the Term
Sheet; and
6. For such other and further relief as the Court may deem just and proper.
Dated: New York, New York
April 19, 2023
JFB LEGAL, PLLC
By:
George
orge W.
W Kroup
Nathaniel E. Marmon
299 Broadway – Suite 1816
New York, NY 10007
(212) 548-3212
KENDALL BRILL & KELLY LLP

Philip M. Kelly (pro hac vice pending)
Nary Kim (pro hac vice pending)
Amanda Barrow (pro hac vice pending)
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10100 Santa Monice Blvd., Suite 1725

Los Angeles, California 90067
(310) 5556-2700
Attorneys for Defendants and

Counterclaimants Paramount Global, South
Park Digital Studios LLC, and MTV
Entertainments Studios
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Warner V Paramount Answer

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Warner V Paramount Answer

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FILED: NEW YORK COUNTY CLERK 04/19/2023 09:01 PM INDEX NO.

SUPREME COURT OF THE STATE OF NEW YORK

WARNERMEDIA DIRECT, LLC,

PARAMOUNT GLOBAL, SOUTH PARK

the Complaint, dated February 24, 2023 (“Compl.”), state as follows:1

1. This is a case about Defendants’ opportunistic repudiation of

did agree to pay monies for the subject streaming rights.

2. South Park (“the Series”) is an extremely valuable franchise.

3. Cognizant of this tremendous value, SPDS—a joint venture

agreed to pay monies to SPDS.

4. In reliance on gaining these exclusive rights, HBO Max (the

4. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 4.

5. After the Parties started performing under the contract,

Paramount Global, through a subsidiary, operates a streaming platform currently known as

6. Warner/HBO brings this lawsuit to vindicate its rights and

6. Paragraph 6 contains legal conclusions, as to which no response is required. To the

7. Plaintiff WarnerMedia Direct, LLC (“Warner/HBO”) is a

7. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 7.

8. Defendant Paramount Global (“Paramount”), formerly

8. Defendants admit that Paramount Global, formerly known as ViacomCBS, Inc.,

that owns and operates numerous properties.

9. Defendant South Park Digital Studios LLC (“SPDS”) is a

is a joint venture between Paramount and the creators of South Park,

place of business in California.

10. Defendant MTV Entertainment Studios (“MTV”) is, upon

Entertainment Studios is a division of Paramount Global.

11. This Court has jurisdiction over Defendants pursuant to

11. Paragraph 11 contains legal conclusions, as to which no response is required.

Notwithstanding, Defendants do not contest jurisdiction in this matter.

12. Venue is proper in New York County pursuant to CPLR §

12. Paragraph 12 contains legal conclusions, as to which no response is required.

Notwithstanding, Defendants do not contest venue in this matter.

13. This case is appropriate for assignment to the Commercial

13. Paragraph 13 contains legal conclusions, as to which no response is required.

14. Warner/HBO is part of Warner Bros. Discovery (“WBD”),

14. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 14.

15. Warner/HBO, together with its affiliated entities, operate

15. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 15.

16. HBO Max features original programming from its namesake

16. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 16.

17. Like any streaming platform, HBO Max is specifically

17. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 17.

18. South Park is an extraordinarily popular animated television

the remaining allegations set forth in paragraph 18.

million worldwide—approximately $150 million in today’s

20. South Park episodes currently premiere on Comedy Central,

21. In 1998, Paramount Pictures Corporation (“PPC”), a

22. Pursuant to the 1998 Agreement, WB and PPC each had a

23. Pursuant to the 1998 Agreement, and premised on their

24. Two decades later, on September 12, 2019, Paramount and

26. South Park is premium content and a top performer,

26. Defendants presently lack knowledge of information sufficient to form a belief as

27. Warner/HBO expected South Park to serve as a critical

27. Defendants presently lack knowledge of information sufficient to form a belief as

to the truth of the allegations set forth in paragraph 27.

28. Warner/HBO participated in the bidding process, which was

29. During the bidding process, SPDS encouraged Warner/HBO