Why the Paramount-Skydance Merger is "F*cking Up ‘South Park’"

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1:54It involves South Park, the 28-year-old comedy central show that was supposed to premiere new episodes this week, but that premiere has been pushed to at least July 23rd. And we can blame the Paramount sale, which has complicated the renewal of streaming rights to the show. South Park streams on HBO Max, but that deal ended recently and the parties haven't been able to finalize a new deal because the current management of Paramount doesn't agree with the incoming Skydance leadership. Or in the words of a statement last week from creators Matt Stone and Trey Parker, quote, This merger is a shit show and it's fucking up South Park.

2:30We are at the studio working on new episodes and we hope the fans get to see them somehow, end quote. Okay, so what's going on here? It's complicated, of course, but this all goes back to a deal in 2007 that Comedy Central's owner did with Matt and Trey that gave them 50 % of all future digital deals for the show. A truly amazing contract, considering this was right before all of television started migrating to digital. But by 2019, Paramount was able to license those South Park streaming rights to HBO Max in a five-year deal that valued them at more than$500 million. It was a big number, but it did nothing to boost Paramount +, which the Paramount leadership wanted to fix in the next year.

3:10So now the current Paramount management wants to split the South Park rights between Paramount +, and Max, and they think they can get more than$1 billion over 10 years from each of them, Bloomberg reported. That's potentially$2 billion sitting there, half of which would go to Matt and Trey. But as I mentioned, the leadership of Paramount is likely changing very soon, and these Skydance people don't love the prospect of a 10-year deal. They want a shorter arrangement for less money. Maybe they'll license South Park to Netflix globally. Skydance feels so strongly that Jeff Schell, who will be the number two under David Ellison, he allegedly contacted Max's owner, telling them not to do the deal, improperly so, according to Matt and Trey's lawyers.

3:51Skydance counters that it has the right to intervene in material deals before the sale closes. And a$2 billion license of one of the company's biggest assets probably qualifies there. Or does it? Matt and Trey are understandably pissed here, but who's right and how will this all play out? So we got Lucas Shaw here to discuss. He's back today and it's the future of South Park and a standoff over billions of dollars. From the Ringer and Puck, I'm Matt Bellany and this is The Town.

4:23All right, we are here with Lucas Shaw, our Monday guy. How are you, Lucas? Welcome back from South Carolina. Oh, again, with the revealing of my secret location. Yes, I am back. I guess it's fine now I'm back. You're in Los Angeles. What are you worried about? You don't want people sending you gift baskets? You're also posting all over Instagram. I am. You're right. But I want to keep my summer location secret so it's not inundated with Hollywood people. Not that anyone would follow my lead on anything. I'm not really worried about Hollywood people coming out to Orient, New York, so I'm happy to disclose my location.

4:57That's true. But we saw in South Carolina, we saw a very prominent Hollywood executive that I will not name. And it sort of alarmed me and my wife. We're like, oh, my God, we cannot have this place become the Hollywood destination. Who was it? Give us a hint. This person used to run. No, I'm not going to do it. I'm not going to do it. Do you know this person well? I do know this person well. So you talked to this person? Yes, we did talk to this person. Did you get drinks with this person? No. We said a very cordial hello. So this person stopped by our table and then my wife saw him the next day at Pilates.

5:32And that was enough. All right. No one cares. Let's move on. Paramount. Everyone's talking about the Trump settlement and rightfully so. We did a whole show on it last week with Brian Stelter. But there is this other scandal, standoff, whatever you want to call it. Let's go standoff. I don't know that it's a scandal. Yeah, not a scandal. But I mean, I'm sure Matt and Trey would say it's a scandal. But we're going to call it a standoff. And it concerns South Park. And the history of South Park is a history of very interesting and unique deals in Hollywood. I still, to this day, the fact that Matt and Trey's lawyers got Viacom then to give them 50 % of the show's digital rights back in 2007.

6:18Still one of the all-time great deals for talent. Can't believe Viacom was dumb enough to do that. Shout out to Kevin Morris. Kevin Morris, Kevin Yorn. Yes, that firm, they did a nice job because that was literally right before the entire television business went digital. Yeah. In Viacom's defense, they did not know what was coming. On the other hand, the internet had been around for a long time. Yeah. And this was perfectly symbolic of how backwards that company was and how short-sighted it was when it came to the internet for a very long time. And remember at the time, what the creators of South Park were doing where they were just putting episodes online for free.

6:56So they were just getting a share of ad revenue. Where this really became valuable was when you started licensing the rights to streaming services and the value of that show on streaming went from tens of millions a year to hundreds of millions a year or more than 100 million a year. I mean, it's crazy. All right. So with that as the backdrop, we've got this standoff between Matt and Trey and the difference of opinion between the current management of Paramount Global and specifically Chris McCarthy, who runs the cable and digital stuff that South Park falls under. And the new regime, David Ellison and his number two that are potentially, looks a little more likely now, going to come in and run this company, Jeff Shell.

7:38So my question for you here is like, why is this a big deal? This is pretty clearly a material deal. This is a potential 10-year deal,$2 billion that this company would be doing a deal for. And 10 years and locking up one of its biggest assets for 10 years. Well, each deal would be worth more than a billion. But yes, collectively more than a two billion. Right, so two billion total if they do the deal with both Paramount Plus and HBO Max. Why shouldn't Ellison and Jeff Schell have the right to have an opinion here and to intervene if they don't think this is the right deal? What's the big problem here?

8:18Why shouldn't they be able to do that? I think the issue from the perspective of the creators of South Park, Trey Parker and Matt Stone, their feeling is that Skydance has a right to approve or deny these deals, but that Skydance has been getting involved in the negotiations and trying to influence the deals before even just getting a hey or nay. They feel like they're already trying to run the company. But isn't that just a mechanism to push back here? It's sort of semantics. Like, okay, Jeff Schell is calling Warner Discovery and telling them not to do the deal, allegedly. There is a difference between saying, we don't think this deal is a good deal and having Jeff Schell or David Ellison call HBO slash Max, whatever, and say, you're negotiating a 10-year deal.

9:12We want it to be a five-year deal for them to call Bella Bajari at Netflix and say, Hey, Bella, we really like the idea of you doing it. How about you step up your offer to X, Y, or Z? You know, I think there is a difference between just saying yes or no and getting involved in negotiations. Now, Skydance slash Redbird's interpretation of this would be that they're still within their rights. And I think they're of the position. One of the real issues in this is not just the licensing, but that Paramount was going to preemptively renew its overall deal with Trey and Matt, which is also worth a lot of money for more episodes of South Park.

9:51Yeah, that's a separate deal. They have a deal to make the original episodes of South Park, not the licensing, the streaming. And that is up at the end of 2027. And Trey and Matt came to them earlier this year and said, we want to do more. Let's add five, six, seven years on to that. And that would also enable these 10-year streaming deals because you know you're getting enough South Park to merit to pay a bunch for 10 more years. And there's a very interesting, kind of, you use cat and mouse, game happening here, where I think they look at it and say, hey, Chris McCarthy and the current leadership at Paramount have been willing to, you know, they've been good to us, they're paying us what we want to do.

10:29But they're one foot out the door. Right, no, I know. But, and they're saying, let's get our, let's get this new deal locked in now so that we don't have to worry about it once David Ellison comes in. And we have essentially eight to 10 years of massive paydays for us. And by the end of that, maybe we'll be good, we'll be done. And Skydance and Redbird are looking at this and saying, we don't want to do that yet. Do a shorter term streaming deal. Don't renew the overall deal. We'll negotiate when we get in because we're going to be the owners. They want to test the market. They want to do their own diligence.

11:02They want to figure out what the best market is for South Park, which they are a partner in, even though they have a 50 % joint venture with these guys. They feel like they need to be in the chair and doing this with them and not have some last-minute Chris McCarthy, one foot out the door, sweet deal with these guys that he has a relationship with. And to me, that seems kind of reasonable. It just feels like they could let this go and let them make their deal with HBO, with Paramount +, and then veto it, right? They could just veto and say, no, we don't like that deal and we're coming in. This is a material deal, but they're intervening a little bit before.

11:43Yeah. I think both sides are doing what you'd expect them to do. The South Park guys are trying to get the best deal possible. Skydance is trying to intervene on a deal that it's a little bit nervous about. And the result is you have the South Park guys upset because they're already going, oh God, is the Skydance regime going to be less friendly to us than the previous one? Because they've had a long and checkered history with this company where they create the show and it becomes this huge hit and everyone's happy back then because they've got this massive hit. During the Philippe Dumas era where Viacom is kind of a struggling, failing company and they're trying to cut costs and the relationship between Viacom and the creators of the show becomes very, not nasty, but bad.

12:34And then Chris McCarthy comes in and he's basically picked two or three guys who he will never say no to. Right. Taylor Sheridan being the other big one. Correct. He's in another situation with the new ownership where there's been a lot of chatter around town about whether David Ellison wants to renew Taylor Sheridan or continue to allow him to spend 20, 22 million dollars an episode on some of these shows. and Sidney Holland, who's going to be the TV head at the new regime, she has been telegraphing to agents, according to my sources, that she wants the budgets to come down on some of these shows.

13:11And that's not something that Taylor Sheridan is used to hearing. Right. Taylor Sheridan is certainly not used to hearing that if you look at the history and a lot of the reporting on his relationship with Paramount. And the South Park guys, they've been doing it for long enough that Trey and Matt are used to people just saying, sounds great. Do what you do, right? Well, very different. The cost of South Park is a lot different. South Park costs a tiny fraction of what a Taylor Sheridan show costs, and it still prints money, right? It's like the only thing other than the Daily Show that matters on Comedy Central.

13:44It's so crazy. I did an interview with a group of high school kids for my summer movie roundup that I've been doing, and I asked what they care about, and they're all like, South Park. We love South Park. And these are 15-year-olds in 2025 who were certainly not alive when this show premiered. Producer Craig was barely alive when this show premiered. And it still delivers an audience. It's kind of amazing. I mean, is there another show that has lasted this long with the original creators still doing it? I don't think there is. Well, The Simpsons. But no, Matt Groening checked out a long time ago.

14:25It's just SNL. Yeah, SNL. That's a good one. And Lauren left for five years. Yeah, I mean, what's worked for South Park is that they only make 10 episodes a year. And so they have a period of the year where they're really cramming and churning out episodes. And then they have a bunch of other time to either go on vacation or pursue other creative pursuits. or make their Kendrick movie that hopefully will come out next year. And so I think that is also one of the issues here is that if you're a skydance and you're looking at it and you're saying we're paying these guys all this money and they're essentially making 10 half-hour episodes a year, like, can we get more out of them?

15:03Yeah, that's a whole separate thing where a couple of years ago, they decided that to get around the HBO Max deal for South Park, Paramount would pay them a bunch of money to do specials, scare quotes mine, because obviously HBO Max did not see it that way. and they started putting specials on Paramount Plus and HBO Max 2. And that's still going on. Well, South Park was like Yellowstone where it was one of the crown jewels of the company that Viacom, Paramount, Viacom, whatever you want to call it, licensed out to a third party. It was a really great deal with HBO Max, right? They got paid more than$100 million a year for South Park.

15:41Even with sharing with Matt and Trey, they're getting more than$50 million a year for the show, pays for the whole thing. But then they said, oh, wait, we were launching Paramount Plus and we don't have South Park. Wouldn't it be great if we had South Park? And so they tried to conceive this workaround that kind of worked, kind of didn't. It's kind of amazing. It's very emblematic of that company that has valued the short-term money boost over the long-term value creation. And their two biggest television assets, arguably, were Yellowstone and South Park, and they didn't have them on their own streaming service.

16:12And I wrote a story to that effect at the time. And guess what? but the executives at Paramount were not happy about it. No, but what could they say? I mean, I did a thing about how the whole Yellowstone deal happened and it turned out it was a David Nevins decision and there were other factors as well, but they freaked out. But it's like this happened. They did not. This was a company-wide ethos. This has been going back 25 years of that company where Sumner Redstone would stare at the stock price and the things that impact the stock price are money this quarter, money immediately. And they ended up mortgaging the long-term health of the company.

16:46And guess what? It ended up being sold. Right. But it's a little bit of a wrinkle in these negotiations is that the deal that has been on the table would be splitting it between HBO Max and Paramount Plus. Yeah. Why do they want to do that? Is that just they want to have money and they want to have it on the service? Correct. But no, but why? Why not keep it for themselves? Well, one, you reduce the exposure of South Park on Paramount Plus. Paramount Plus is just not that big a service. Yeah. But maybe it gets bigger if everybody who loves South Park, all these kids that I interviewed would go over there.

17:16It's a marginal addition. This way, under the deal that had been discussed, at least, they would get paid essentially the same amount of money or just a little bit less than they're getting paid under the current deal. And they'd get to still put it on Paramount Plus and use it to generate interest in it. So that one makes a lot of sense because otherwise you do the Netflix thing and you get paid more money, but then you don't get no benefit to Paramount Plus. Right. Maybe more money, but yeah. And I agree that they're probably looking at the data and the Paramount Plus audience is different than the Max audience.

17:48And they could essentially have their cake and eat it. Yeah, the Paramount Plus audience is the Taylor Sheridan audience, the NFL audience. And yeah, it makes sense that they would want to get money.

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19:23Go ahead, crack open a can of NOS Energy and get after it. It all gets to the timing of when Ellison and Jeff Schell are going to actually control this. And we got an update last week on this with the settlement of the Trump litigation. By the way, who do you believe in this scenario? Do you believe the press release that said that Paramount is paying$16 million and will not apologize and is not paying anything else on the side deal or anything like that? Or do you believe Donald Trump, who went on television this past weekend and said, we did a deal for about$16 million plus$16 million or maybe more than that in advertising.

20:06It's like$32, maybe$35 million. Now, Skydance has not said whether that is true or not. My sourcing on it say that that is not true. They have not agreed to pay anything extra in a side deal. That would be illegal if it were overt, you know, a quid pro quo. I talked with Brian Stelter about this last week. We both think that perhaps the FCC will extract the PSAs, the ads that they will have to run and would bring the value up, and that Trump thinks that Brendan Carr is going to be able to get that in his deal with Paramount to clear the sale. Where do you stand on that? One, when in doubt, you don't trust what Trump puts out there.

20:49How dare you? Or you trust someone else over him because he's more likely to stretch the truth. But I think one thing that Trump is very good at is he will sort of deceive but not outright lie a lot of the time. And so I think that the deal is the$16 million deal, but there probably have been conversations around the PSAs. And to your point, there could be some part of getting the deal approved by the FCC, or there could be a backroom wink-wink handshake with the Ellisons of how certain things that may happen in the future but are not officially part of the deal. We know they were literally in a back room at UFC talking.

21:28And Ari Emanuel organized the whole thing. He's an Ellison advisor. He used to represent Trump. And they're talking about something behind the scenes there. So I default to trusting Paramount while also not being surprised if you end up having some PSAs. Yeah, I believe Paramount. I mean, and I think the FCC approval is, we've had months of hand-wringing over what the settling the suit with Trump means. this FCC approval is not going to be nothing. Right. They still have leverage. Trump has shown that he will use whatever leverage he has. And even though this lawsuit has settled, they still have the FCC approval leverage.

22:03Yeah. There's going to be agreements around DEI and all sorts of things that will make people very upset. Right. I know. That's the thing is we were talking about how the no apology thing is actually good for CBS News because I don't think we're going to see mass exits or resignations right now. But it's not over. No. And what if part of the settlement is CBS News or 60 Minutes has to add, you know, their version of Scott Jennings, the CNN guy, to be a socially conservative commentator? Yeah, or they'll agree to diversity viewpoint. So they will impose some internal watchdog that the administration is okay with.

22:43I mean, look, Paramount, I think, so far, sort of made the best of a shitty situation. But yeah, they're not through the woods yet. Right. And this all impacts the South Park situation, I think, just because it's yet another example of the chaos that has enveloped this company in limbo. We still don't know when this deal is going to be approved, if it is going to be approved. And this has now impacted the premiere date for the show. They've said it's only a two-week delay right now. But I checked in this morning and there's no movement on this. How long can this be dragged out? Well, the impact is twofold.

23:23On the one hand, they don't want to introduce the new season of South Park until they have a long-term streaming deal. But a lot of the long-term streaming deals, or at least some of the streaming deals that they want to do, are predicated on the extension of that other deal, the overall deal with Matt and Trey that we discussed. And Allison has basically said, I don't want to talk about a new overall deal until I own the company. and that's not going to happen for at a minimum a month or two, right? And they're going to want South Park to premiere before that, I have to imagine. So they might have to negotiate some other streaming deal.

23:57Well, what does that mean? What is the quick fix here? Well, they would do the deal that Ellison wants where they do a five-year licensing streaming deal instead of a 10-year. Okay, so they would essentially capitulate. They could, yes. Ellison could say, look, you're getting paid just as much money. why not do a five-year deal? So doing though, he kind of directly antagonizes these creators that he's in bed with. And he doesn't want to do that before he takes over the company. He doesn't want the creators of South Park just shitting on him every other episode. I was going to say, next thing you know, there's going to be a 40-year-old kid of a billionaire who takes over the town in South Park and becomes the villain of every season.