Warner Sues Paramount For Alleged Breach Of Content Licensing Contract For South Park

On Friday, Warner Bros. Discovery, Inc WBD prosecuted Paramount Global's PARA South Park Digital Studios and MTV Entertainment.

Warner sought hundreds of millions of dollars for Paramount's alleged breach of contract, CNBC reports.

In 2019, Warner agreed to pay over $500 million, or approximately $1.69 million per episode, to license "South Park," cartoon Paramount's cable-TV network Comedy Central aired for decades, for its streaming platform HBO Max.

During bidding for the "South Park" rights, Warner allegedly refused to share the rights to the show for Paramount's streaming service when the latter proposed.

However, Warner alleged that Paramount withheld "South Park" specials and other related content, violating the contract. The suit pointed to Paramount's streaming service, Paramount+, as the reason.

A Paramount spokesperson denied Warner's claims. The Paramount spokesman also highlighted that Paramount adhered to the contract by delivering new South Park episodes to HBO Max, despite Warner's failure to pay license fees for broadcasted episodes, which HBO Max continued to stream.

Warner further alleged the scheme held good when Paramount's subsidiary MTV inked a deal with the "South Park" creators in 2021, which called for exclusive content for Paramount+, reportedly worth $900 million.

"We believe that Paramount and South Park Digital Studios embarked on a multi-year scheme of unfair trade practices and deception, flagrantly and repeatedly breaching our contract, which clearly gave HBO Max exclusive streaming rights to the existing library and new content from the popular animated comedy South Park," a Warner Bros. Discovery spokesperson stated on Friday.

The clash comes as streaming services struggled to win subscribers spending billions of dollars on content and cutting costs.

Paramount reported fourth-quarter FY22 revenue growth of 2% year-on-year to $8.13 billion, missing the consensus of $8.16 billion. Adjusted EPS of $0.08 missed the consensus of $0.24.

Paramount+ added 9.9 million subscribers in the quarter, bringing Paramount+'s total subscribers to 56 million.

Warner Bros Discovery reported fourth-quarter revenue of $11.01 billion, which missed average analyst estimates of $11.36 billion. The company's top-line results were down 9% year-over-year.

Warner Bros Discovery reported an EPS loss of $(0.86), versus the consensus loss of $(0.20).

Price Action: PARA shares traded higher by 0.45% at $22.40 premarket on the last check Monday.