The team behind Comedy Central’s “South Park” raised allegations that Skydance Media and its associates overstepped their authority by meddling in Paramount Global’s business before they take control of the storied company.
The Los Angeles Times previously reported that negotiations over a “South Park” streaming deal have stalled amid Paramount’s protracted $8-billion sale to David Ellison’s Skydance Media. Skydance balked at a proposed $2-billion overall deal with “South Park” creators, Trey Parker and Matt Stone, sources have said.
Federal securities laws forbid “gun-jumping,” a term that describes a company that exerts too much control over a business it is in the process of buying before the transaction closes. Under the terms of the merger deal, Paramount gave Skydance the ability to approve major deals while the sale is pending.
But this week, Park County — the business entity behind the long-running satirical cartoon — alleged that Ellison’s associates crossed the line by interfering with its negotiations with other companies.
In a series of letters, Park County questioned the conduct of Jeff Shell, a former NBCUniversal chief executive who is part of Ellison’s bidding team. Shell is a senior executive with RedBird Capital Partners, a private equity firm that is helping Skydance finance the Paramount deal.
In a Tuesday letter to RedBird’s general counsel, which was viewed by The Times, Park County’s lawyers accused Shell of committing “intrusive, unauthorized, and gun jumping misconduct” by inserting himself into the auction for “South Park” streaming rights and attempting to depress the show’s value.
The lawyers contended that “not one word” in the 160-page sale agreement between Skydance and Paramount authorized Skydance or Redbird to “intrude” into negotiations over “South Park” streaming deals.
“This misconduct is already causing destruction not only to the business of “South Park”… but also the productive decades-long relationship between artists and studio on an iconic show,” the lawyers wrote.
A spokeswoman for Skydance disputed misconduct by Shell, adding, “Any accusation that Jeff Shell tried to lower the price or devalue the franchise in any way is not only nonsensical but patently false.”
“Under the terms of the transaction agreement, Skydance has the right to approve material contracts,” the spokeswoman continued.
The dispute comes as the “South Park” creators work to line up a new streaming deal after its five-year pact with Warner Bros. Discovery’s Max service ended this week. Paramount wants to make the long-running Comedy Central show available on its Paramount+ platform. However, given the high cost of the show, Paramount wants to share the rights to the 333 episodes with another streaming service.
Knowledgeable people have said they expect “South Park” distribution fees to be valued at more than $200 million a year.
But Skydance hasn’t signed off, believing the deals to be too rich, according to multiple sources. Paramount executives think the show is worth the big bucks given its enduring global popularity and legacy.
Park County has alleged Shell inserted himself into negotiations with two prospective partners: Netflix and Warner Bros. Discovery. Both have expressed interest in licensing the show.
Park County accused Shell of calling executives at those companies to lower their bids for “South Park,” which would deprive Parker, Stone and Paramount of a higher licensing fee.
Paramount owns half of a joint venture called South Park Digital Studios, which controls the streaming rights to the show. Stone and Parker control the other half of the venture that dates back to 2007.
“Mr. Shell’s proposed changes worsen the deal for South Park Digital Studios, and they appear to be designed to cheapen the business of Skydance Media’s acquisition target, Paramount Global,” Park County lawyer Joseph R. Taylor wrote in a Monday letter to Paramount executives.
“This misconduct is already causing destruction not only to the business of South Park through depressing offers for the [Subscription Video On Demand] rights, but also the productive decades-long relationship between artists and studio on an iconic show,” Taylor wrote. “Further misconduct of this nature will naturally force legal action.”
Two sources close to the matter said that Skydance has objected to the 10-year span of the proposed deals with Paramount+ and Max (soon to be renamed HBO Max) as well as the 10-year span for the overall deal with Parker and Stone. Skydance, the sources said, preferred five-year deals due to changes in the market.
Max’s current deal to stream “South Park” ended this week. However, due to the company’s interest in bidding for the rights, the episodes will remain on the service until a new deal can be worked out, said one person close to the company who was not authorized to speak publicly.
Paramount leaders want to lock down “South Park” streaming rights in the U.S. and abroad and were interested in extending Paramount’s $900-million overall deal with the “South Park” creators to guarantee the production of new episodes. But that deal doesn’t expire for another two years, and Skydance executives don’t want to extend that deal before they take control of Paramount, according to sources.
New episodes run first on Paramount’s basic cable network Comedy Central.
“South Park” is one of Paramount’s most important TV franchises. Along with “The Daily Show” with Jon Stewart, the four boys from the fictional Colorado hamlet of South Park put Comedy Central on the map for basic cable viewers.
During a May earnings call, Paramount co-Chief Executive Chris McCarthy — who runs Paramount’s media networks as well as Showtime and MTV Entertainment Studios — told investors that “South Park” episodes would begin streaming on Paramount+ in July, although that deal has not been nailed down.
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