The recent, high-stakes negotiation for the streaming rights to “South Park” was a masterclass in modern media dealmaking. When the dust settled, the iconic series landed exclusively on Paramount+ in a five-year deal valued at $1.5 billion. One of the most revealing aspects of this saga wasn’t just the massive final number, but the bidding strategies of the key players, particularly HBO Max. Using Parrot Analytics’ Streaming Economics data, we can see exactly how the show’s past performance on HBO Max dictated the platform’s bidding limit, a cap that ultimately took them out of the running.
The backdrop of this heated negotiation over a particularly valuable piece of IP is a growing market for adult animation. In 2020, adult animated shows (excluding anime) accounted for about 2% of global demand for all series. This has consistently grown over the past 5 years, peaking this year at a 3.5% share. It might seem like a modest uptick in growth when we are talking about single-digit percentage points, but going from 2% to 3% means that the share of global audience attention this genre accounts for is 50% larger today than it was in mid-2020.
And while 3% might be small when considering the entire universe of shows out there, adult animation includes some of the most recognizable, longest-running and most valuable titles, so it is far from a niche genre. In addition to the eye-watering price paid for the rights to “South Park,” Hulu is doubling down on this genre with reboots of classic titles like “King of the Hill” and “Futurama.”
Returning to the specifics of the “South Park” deal, to understand why HBO Max bid the way it did, we have to look at the performance of its investment. In 2019, Paramount licensed the U.S. streaming rights for “South Park” to its rival. This proved to be a highly profitable, if temporary, arrangement for Warner Bros. Discovery (WBD).
The total cost to WBD for the five-year license fell in the $535 million to $562 million range. Our Content Valuation system shows that since the deal began in mid-2020, “South Park” generated an estimated $586 million in U.S. streaming revenue for HBO Max. This means WBD didn’t just recoup its investment, it saw substantial profits in the tens of millions of dollars.
However, the most crucial data point for understanding negotiations is the show’s recent performance. In the last four quarters, “South Park” generated just over $106 million in subscriber revenue for HBO Max. This is with no new season releases on the platform, highlighting the show’s power as an evergreen library title that consistently drives value.
The $106 million in recent annual revenue helps explain HBO Max’s bidding strategy. They entered the negotiations with an offer to co-license the show for approximately $105 million per year. This was a bid rooted entirely in financial reality and shows a willingness to pay almost exactly what the show was already earning for the platform.
Bidding significantly higher would erode their profitability on a property they no longer held exclusively. The slim margins meant HBO Max had very little room to maneuver, a prediction confirmed by their unwillingness to enter a major bidding war. Netflix entered the ring with aggressive offers, climbing from $250 million to $275 million per year for worldwide rights, which surpassed HBO Max’s data-grounded offer.
Paramount ultimately struck the knockout blow, with an exclusive global deal for $300M per year, nearly triple what HBO Max offered to pay for U.S. rights alone. For Paramount, justifying this expense will require the same level of data-driven analysis. As the company enters a new era following its merger with Skydance, the dependable value of a long-running and beloved piece of IP like “South Park” may be exactly what the company needs.
