1 MARC M.

SELTZER (54534)
mseltzer@susmangodfrey.com
2 DAVIDA BROOK (275370)
3 dbrook@susmangodfrey.com
ROHIT D. NATH (316062)
4 rnath@susmangodfrey.com
ANNA COLL (337548)
5 acoll@susmangodfrey.com
SUSMAN GODFREY L.L.P.
6
1900 Avenue of the Stars, Suite 1400
7 Los Angeles, California 90067-6029
Telephone: (310) 789-3100
8 Facsimile: (310) 789-3150

9 Attorneys for Plaintiffs Sony Pictures Television Inc.;

Jeopardy Productions, Inc.; and
10 Califon Productions, Inc.

11

12

13 SUPERIOR COURT OF THE STATE OF CALIFORNIA

14 FOR LOS ANGELES COUNTY

15

16 SONY PICTURES TELEVISION INC., Case No.

JEOPARDY PRODUCTIONS, INC., and
17 CALIFON PRODUCTIONS, INC., COMPLAINT FOR BREACH OF
CONTRACT
18 Plaintiffs,

19 vs.
JURY TRIAL DEMANDED
20
CBS STUDIOS INC., and DOES 1 through 10,
21 inclusive,
22 Defendants.

23

24

25
Plaintiffs Sony Pictures Television Inc.; Jeopardy Productions, Inc.; and Califon Productions,
26
Inc. (collectively, “Plaintiffs” or “Sony Pictures”) bring this action against Defendant CBS Studios Inc.
27
(“CBS” or “Defendant”) and Does 1 through 10.
28

COMPLAINT FOR BREACH OF CONTRACT

 1 NATURE OF THE ACTION

2 1. Five days a week for more than four decades, no matter what changed in the world—be

3 it the end of the Cold War, the turn of the millennium, or a global pandemic—millions of Americans

4 have played along with Jeopardy! and Wheel of Fortune 1 from the comfort of their homes. These Merv

5 Griffin creations are widely considered two of the greatest and most popular game shows in American

6 history.

7 2. For more than 35 years, Sony Pictures has been responsible for producing and financing

8 the Shows, delivering over 400 high-quality and top-rated episodes per year. Sony Pictures entrusted
9 CBS, by contract, with the obligation and duty to distribute these prized shows. CBS expressly
10 undertook the duty to use its “best efforts” to license the Shows to local television stations and to sell
11 national advertising in a manner that would maximize the receipts that could be obtained from
12 distributing these very valuable properties. In return, CBS gets a 35% to 40% share of the receipts.
13 Unfortunately, it is now clear that CBS has fallen woefully short of holding up its end of the bargain.
14 The reality is that CBS has been egregiously undercutting the value and profitability of these shows in
15 favor of its own self-interest and in violation of its contractual obligations.
16 3. Rather than live up to its obligations under the terms of the parties’ agreements, CBS
17 recently admitted that it entered unauthorized licensing deals, in plain violation of a negotiated, two-
18 year limit for such licenses under the agreements, and then paid itself a commission on those deals.

19 These unauthorized deals are just the tip of the iceberg. In fact, CBS has licensed the Shows at below-

20 market rates; has failed to maximize advertising revenue; has undercut Jeopardy! and Wheel of Fortune

21 through self-preferencing; and has rendered itself incapable of administering its obligations under the

22 agreements, including by its far-reaching layoffs that have decimated teams responsible for the Shows’

23 distribution, marketing, and advertising sales and its decision to abandon its partnership with ratings

24 provider Nielsen, whose ratings are critical for CBS to maximize advertising sales and syndication

25 licenses. CBS’s failures and pattern of financially self-interested behavior—which at bottom come

26

27
1
Collectively referred to as “the Shows,” “the Series,” or “the Property” in this Complaint.
28
2
COMPLAINT FOR BREACH OF CONTRACT
 1 down to putting its own business interests over its contractual obligations to Sony Pictures—are

2 straightforward breaches of the agreements’ express best-efforts clauses and the implied covenant of

3 good faith and fair dealing.

4 4. The agreements at issue were executed in 1982 and 1983 between Plaintiffs’ and CBS’s

5 predecessors. Under the original agreements and amendments (“the Agreements”), CBS was granted

6 the exclusive right to distribute the Shows in domestic television syndication and certain foreign

7 distribution rights. CBS is obligated to put forth its “best efforts” to “secure the maximum receipts”

8 from the distribution of the Shows. That distribution obligation (hereinafter, “Distribution” or
9 “Distributing”) encompasses, but is not limited to, licensing the Shows to local television stations and
10 station groups; selling national advertising and maximizing advertising sales revenue; promoting and
11 marketing the Shows locally and nationwide; specified merchandising; distributing the shows to linear
12 broadcasters internationally; and licensing the format in international markets. In return, CBS receives
13 a percentage of the receipts from Distribution. And CBS has profited massively—to the tune of more
14 than a billion dollars—under the Agreements, due principally to Sony Pictures’ ongoing investment in
15 and consistent dedication to producing the Shows.
16 5. In March of 2023, CBS belatedly notified Sony Pictures that it entered into “a few
17 international deals” to license the Shows in Australia and New Zealand for a period that plainly violated
18 a negotiated, two-year limit for such licenses under the Agreements. CBS also admitted that it pocketed

19 distribution fees from these unauthorized deals. When Sony Pictures demanded that CBS remit its ill-

20 gotten gains, CBS refused. After over a year of trying and failing to get CBS to cure its material breach,

21 Sony Pictures has been forced to file this Complaint.

22 6. But CBS’s misconduct goes far beyond the unauthorized Australia and New Zealand

23 deals. Plaintiff’s investigation has revealed that CBS has failed to put forth its “best efforts” in

24 Distributing the Shows to “secure the maximum receipts therefrom,” thereby abdicating its core

25 contractual duty under the Agreements. Most notably, CBS has failed to license the Shows at the

26 premium prices they deserve to obtain both domestically and abroad; has neglected to maximize gross

27 receipts from advertising sales; has self-preferenced and prioritized CBS’s far-less-popular assets at

28
3
COMPLAINT FOR BREACH OF CONTRACT
 1 the expense of the Shows, including by giving its wholly-owned shows privileged premium placements

2 at the Shows’ expense and bundling the Shows in a way that reduces the gross receipts attributable to

3 the Shows from licensing and advertising sales; has failed to maximize prices for foreign-format

4 licensing; has conducted massive layoffs; and has failed to renew its Nielsen ratings contract that have

5 rendered CBS incapable of fulfilling its obligations under the Agreements.

6 7. CBS’s wrongdoing is all the more egregious given Sony Pictures’ extraordinary efforts

7 to uphold its end of the bargain in producing two of America’s greatest game shows. Sony Pictures and

8 its staff have for decades worked to bring each episode to life. Sony Pictures’ talented writers,
9 researchers, and producers come up with the clues and puzzles that keep contestants and audiences
10 guessing. Sony Pictures’ executives and producers identify and hire the Shows’ iconic hosts, who have
11 become synonymous with the shows themselves, including Pat Sajak, Vanna White, the late Alex
12 Trebek, Ken Jennings, and Ryan Seacrest. To this day, Sony Pictures’ dedicated crew tapes every
13 episode before a live studio audience at the historic Sony Pictures lot in Culver City. Just this season,
14 Sony Pictures invested millions of dollars in state-of-the-art camera, lighting, and editing equipment,
15 and upgraded the sets and technology that support production of the Shows. It is this longstanding and
16 continuous dedication that has built Jeopardy! and Wheel of Fortune into national and international
17 treasures that have, collectively, won more than 50 Emmy Awards and secured another 212 Emmy
18 nominations.

19 8. Sony Pictures brings this action in response to CBS’s widespread breaches of the

20 Agreements and to protect the value of two of America’s favorite and longest-running game shows.

21 THE PARTIES

22 9. Sony Pictures Television Inc. is a corporation organized and existing under the laws of

23 Delaware, with its principal place of business located at 10202 W. Washington Boulevard, Culver City,

24 California. It is a third-party beneficiary under the Agreements and is affiliated with Jeopardy

25 Productions, Inc. and Califon Productions, Inc.

26

27

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COMPLAINT FOR BREACH OF CONTRACT
 1 10. Jeopardy Productions, Inc. is a corporation organized and existing under the laws of

2 Delaware, with its principal place of business located at 10202 W. Washington Boulevard, Culver City,

3 California.

4 11. Califon Productions, Inc. is a corporation organized and existing under the laws of

5 California, with its principal place of business located at 10202 W. Washington Boulevard, Culver

6 City, California.

7 12. Plaintiffs own, and at all times relevant to this Complaint have owned, all contractual

8 rights possessed by the “Owner(s)” under the Agreements.

9 13. Upon information and belief, CBS Studios Inc. is a corporation organized and existing
10 under the laws of Delaware with its principal place of business located at 7800 Beverly Boulevard, Los
11 Angeles, California. Upon information and belief, CBS Studios Inc. owns, and at all times relevant to
12 this Complaint has owned, all contractual rights possessed by the “Distributor(s)” under the
13 Agreements. Upon information and belief, CBS Studios Inc. operates under the Agreements through
14 CBS Media Ventures, a division of CBS Studios Inc.
15 14. The true names and capacities, whether individual, corporate, association, or otherwise,
16 of the Defendants Does 1 through 10 are unknown to Plaintiffs, who therefore sue said Defendants by
17 fictitious names. Plaintiffs are informed and believe, and thereupon allege, that each of the Doe
18 Defendants designated herein is responsible in the same manner for the events and happenings herein

19 referred to, and in some manner caused the injuries and damages to Plaintiffs alleged herein, and

20 include Defendant’s agents, predecessors-in-interest, successors-in-interest, and assigns. Plaintiffs will

21 ask leave of the court to amend this Complaint to insert the true names and capacities of said

22 Defendants when the same have been ascertained by Plaintiffs, together with the appropriate charging

23 allegations, and to join such Defendants in this action.

24 JURISDICTION AND VENUE

25 15. The Court has subject matter jurisdiction over Plaintiffs’ claim for breach of contract.

26

27

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COMPLAINT FOR BREACH OF CONTRACT
 1 16. This Court has personal jurisdiction over Defendant because Defendant maintains its

2 principal place of business in Los Angeles, California, and regularly communicates and engages in

3 business with Plaintiffs, who are located in California, under the Agreements.

4 17. Further, Defendant operates under the Agreements through its CBS Media Ventures

5 division, which, upon information and belief, has its principal place of business in Los Angeles,

6 California.

7 18. Venue is proper in this Court pursuant to California Code of Civil Procedure Section

8 395 because Defendant resides in Los Angeles County, California.

9 FACTUAL ALLEGATIONS
10 A. The Distribution Agreements

11 19. At all relevant times, Sony Pictures and related entities have owned all rights in

12 Jeopardy! and Wheel of Fortune, including all copyrights and trademarks.

13 20. Califon Productions, Inc. and CBS Studio Inc.’s predecessor, King World Productions,

14 Inc., entered into a Distribution agreement for the Wheel of Fortune television series on December 15,

15 1982 (“WOF Agreement”).

16 21. Califon Productions, Inc. entered into a similar Distribution agreement with King World

17 Productions, Inc. for the Jeopardy! television series on November 1, 1983 (“Jeopardy! Agreement”).

18 22. Through the WOF Agreement and the Jeopardy! Agreement, Plaintiffs granted CBS the

19 “sole and exclusive right . . . to distribute” the Series “by syndication . . . by means of free television

20 broadcasting” for “so long as” Plaintiffs “produce[] episodes for first-run syndication ….”

21 23. The initial agreements executed by the parties provide for Distribution in the United

22 States only, in the first-run syndication market, and only on a season-by-season basis.

23 24. By subsequent amendments, the Distribution territory under the initial agreements was

24 expanded to international territories, with the express limitation that each such license could be “for a

25 period not to exceed two (2) years.” Consistent with the Agreements, it is the longstanding practice

26 and understanding of both parties that only Sony Pictures controls the right to license and distribute to

27 international territories beyond two years.

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COMPLAINT FOR BREACH OF CONTRACT
 1 25. The Agreements entitle CBS to deduct its “[d]istribution [f]ees” and certain expenses

2 from the gross receipts paid to and received by CBS from Distribution of the Series. Sony Pictures is

3 entitled to the remainder. CBS’s distribution fees range from 35% to 40% under the Agreements.

4 26. Under the Agreements, in exchange for granted rights and a share of the receipts from

5 Distribution, CBS has promised to “use its best efforts . . . to distribute the Property so as to secure the

6 maximum receipts therefrom.” CBS’s duties and responsibilities for which its best efforts are required

7 under the Agreements include, but are not limited to, licensing programming domestically and (within

8 certain limitations) internationally and selling advertising.

9 27. The Agreements are governed by New York law.
10 28. In accordance with the Agreements, it has been the explicit understanding of Sony
11 Pictures and CBS that any and all Distribution rights not expressly granted to CBS are retained by Sony
12 Pictures and related entities.
13 29. The scope of CBS’s limited Distribution rights under the Agreements is a material term
14 of the Agreements because, among other reasons, it also defines the distribution rights for the Series
15 that Sony Pictures retains and has retained for more than 35 years.
16 30. At all relevant times, CBS has made any payments under the Agreements to Sony
17 Pictures Television Inc., with the understanding that Jeopardy Productions, Inc. and Califon
18 Productions, Inc. have assigned their share of receipts under the Agreements to Sony Pictures

19 Television Inc. consistent with the Agreements’ terms.

20 B. CBS Admits It Breached The Distribution Agreements In March 2023.

21 31. On March 13, 2023, a CBS Media Ventures executive vice president contacted Sony

22 Pictures to advise that CBS had entered into a number of foreign licensing agreements in Australia and

23 New Zealand that exceeded the scope of certain Distribution rights granted under the Agreements.

24 Because CBS did not disclose the terms of its third-party license agreements, Sony Pictures had

25 previously been unaware of CBS’s breach.

26

27

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COMPLAINT FOR BREACH OF CONTRACT
 1 32. In entering those foreign licensing agreements (“Unauthorized Deals”), CBS violated

2 its limited Distribution rights under the Agreements: The Unauthorized Deals lasted for more than two

3 years.

4 33. The two-year limit for such licenses is a material term of the Agreements because it

5 delineates between foreign distribution rights granted to CBS and rights retained by Sony Pictures.

6 34. After learning of the breach, Sony Pictures sought additional information concerning

7 the scope of the Unauthorized Deals, as well as the amount of gross receipts and distribution fees that

8 CBS had collected and retained from the Unauthorized Deals.

9 35. In June 2023, CBS confirmed that the number of Unauthorized Deals far exceeded those
10 it had originally identified in March 2023.
11 36. Though CBS had no contractual right to any proceeds from the Unauthorized Deals in
12 the first place, it nevertheless insisted on keeping its distribution fees or commission from unlawfully
13 exploiting Sony Pictures’ intellectual property.
14 37. Eventually, Sony Pictures deduced that CBS had kept millions of dollars in connection
15 with the Unauthorized Deals—more than $3.6 million. At no point, despite requests to CBS as early
16 as August 2023, has CBS remitted the ill-gotten distribution fees.
17 38. In June 2024, Sony Pictures renewed its demand for CBS to return the impermissible
18 distribution fees.

19 39. On July 1, 2024, the President and CEO of CBS Media Ventures contended that Sony

20 Pictures had received its “share” of all revenue it was entitled to receive under the Unauthorized Deals,

21 even though CBS had unlawfully kept a portion of the receipts from the monies collected under these

22 Unauthorized Deals. The correspondence made CBS’s position clear: CBS would not cure its material

23 breach of the Agreements by remitting the improperly obtained and retained distribution fees.

24 40. On August 19, 2024, Sony Pictures sent CBS a letter terminating the Agreements due

25 to CBS’s failure to cure within 30 days its material breaches of the Agreements (“Termination Letter”).

26

27

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COMPLAINT FOR BREACH OF CONTRACT
 1 41. On August 23, 2024, CBS responded in writing to the Termination Letter by contending,

2 among other things, that the Termination Letter had no effect, that the Agreements remained in place,

3 and that CBS would continue Distributing the Series.

4 42. In light of CBS’s August 23 letter and CBS’s refusal to remit to Sony Pictures the

5 improperly obtained and retained fees, Sony Pictures has been forced, reluctantly, to resort to litigation.

6 C. CBS’s Admitted Material Breach Is The Tip Of The Iceberg.

7 43. As it turns out, CBS’s material breach arising out of the Unauthorized Deals—and

8 subsequent refusal to remit what it impermissibly collected in distribution fees—is just one of many
9 examples of CBS’s manifest failure to comply with its obligations under the Agreements.
10 44. Under the Agreements, CBS expressly promised to use its “best efforts” to “secure the
11 maximum receipts” from Distribution of the Shows. Distribution encompasses licensing the Shows,
12 selling advertising, marketing, and promotions, as well as pursuing steps to support those overarching
13 functions, including maintaining appropriate staff, managing affiliate relations, and tracking relevant
14 ratings and other data to inform decision-making.
15 45. The Agreements also contain an implied covenant of good faith and fair dealing, which
16 requires CBS to Distribute the Series in good faith and at the same time prohibits CBS from taking
17 action to undercut the success of the Series for its own benefit or undertaking activities in derogation
18 of its Distribution obligations.

19 46. As set forth below, CBS has violated both the express requirement that it use its “best

20 efforts” to “secure the maximum receipts” from Distribution of the Shows and the implied covenant of

21 good faith and fair dealing.

22 47. While Plaintiffs presently assert claims arising out of CBS’s material breach in profiting

23 from the Unauthorized Deals, as set forth in Section B above, Sony Pictures provided notice in writing

24 to CBS on October 31, 2024, of additional material breaches, examples of which are set forth below.

25 Sony Pictures has done so without waiving its right to contend that notice was not required under the

26 applicable law due to, among other things, the incurable nature of CBS’s breaches. Regardless, if CBS

27 fails to remedy those breaches and the injury they have caused by November 30, 2024, Plaintiffs will

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COMPLAINT FOR BREACH OF CONTRACT
 1 amend this Complaint to expressly assert claims arising out of CBS’s breaches of the Agreements’

2 best-efforts clauses and the implied covenant of good faith and fair dealing.

3 1. CBS’s Dismal Performance

4 48. Because Wheel of Fortune and Jeopardy! are the two most popular syndicated television

5 series nationwide, they can be licensed to local affiliate television stations nationwide at premium

6 prices. But in practice, CBS failed to obtain the premiums for the Shows that it could have and should

7 have obtained had it exercised its best commercial efforts in domestic Distribution.

8 49. For years, CBS had told Sony Pictures that it projected minimal (i.e., 1-2%) or no
9 growth in year-over-year licensing revenues from domestic Distribution of the Shows. CBS’s exact
10 words to Sony Pictures executives were: “Flat is the new up.”
11 50. Skeptical of and concerned about those projections, Sony Pictures had to step in and
12 protect the value of its properties. Sony Pictures began to actively participate in the ABC station group
13 negotiations in 2018, later taking complete control of negotiations with the ABC station group in the
14 top eight major metropolitan markets, which account for over 40% of the total revenue derived from
15 domestic station affiliate licensing fees. In doing so, Sony Pictures diverted its own staff and resources
16 to perform CBS’s obligations to negotiate licenses for domestic syndication under the Agreements.
17 Sony Pictures did so in order to protect its assets and to confirm whether CBS’s projections and
18 performance were a product of good-faith and best efforts, or whether they were not.

19 51. The results were stark. When Sony Pictures first became involved in the ABC station

20 group negotiations in 2018, license fees for the next renewal term shot up by 17%. Sony Pictures-led

21 negotiations between 2021 and 2022 culminated in an even more significant increase in licensing fees

22 for the following renewal term with bids from all major station groups. Before Sony Pictures stepped

23 in—i.e., before Sony Pictures started doing the work that CBS was obligated to perform under the

24 Agreements—CBS’s licensing revenues from these eight markets had completely stagnated, with

25 minimal or nonexistent growth. CBS profited handsomely from Sony Pictures’ negotiating efforts, as

26 it collected a distribution fee on the increased receipts from these top eight markets, thanks to Sony

27 Pictures’ intervention.

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COMPLAINT FOR BREACH OF CONTRACT
 1 52. During the same period that Sony Pictures was doing CBS’s work for them with the

2 ABC station group, CBS continued to license the Shows to other station groups and network affiliates

3 nationwide. CBS’s performance during this period (or lack thereof) was consistent with CBS’s stated

4 mantra that “flat is the new up.” CBS was getting much lower growth—in the range of 1% per year—

5 in licensing fees from the markets in which it continued to negotiate licenses.

6 53. Sony Pictures’ success in achieving growth in those markets was not due to any unusual

7 strategy, nor was it a product of anything peculiar to those particular affiliates. The growth was

8 principally due to the commodities being sold. Jeopardy! and Wheel of Fortune are popular, premium
9 television shows, for which any distributor exhibiting commercially reasonable and good-faith efforts
10 could obtain premium licensing fees and significant, consistent growth in those fees over time. What
11 was unusual and peculiar was CBS’s manifest failure to achieve any significant growth when dealt
12 such prime products to distribute.
13 54. CBS’s failures extend to foreign distribution and foreign-format licensing, where CBS
14 has distributed Jeopardy! and Wheel of Fortune at dramatically below-market prices. For example, in
15 March 2024, CBS sold the Wheel of Fortune format for $384 per episode to the Johannesburg-based
16 Primedia for distribution in South Africa. Under that deal, Primedia agreed to purchase a minimum of
17 100 and maximum of 260 episodes. Around that same time, Sony Pictures secured a deal with Primedia
18 for a game show’s format it distributes itself called Raid the Cage, which, while successful, is a far

19 lesser-known brand than Wheel of Fortune. Sony Pictures sold 260 episodes of Raid the Cage for

20 $1,500 per episode. In other words, Sony Pictures sold more episodes of a less popular show at nearly

21 4x the price per episode. As with domestic licensing, Sony Pictures did not get a better price due to any

22 unique tricks of the trade; Sony Pictures’ efforts to license Raid the Cage were in line with the

23 customary practice in the television industry. Had CBS itself exercised its “best efforts” with respect

24 to the more popular and storied Wheel of Fortune, it should have secured a higher price-per-episode

25 for that show. Yet CBS’s lackluster effort led to a pennies-on-the-dollar foreign-format deal for Wheel

26 of Fortune.

27

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COMPLAINT FOR BREACH OF CONTRACT
 1 55. CBS’s failures in both domestic licensing and foreign-format licensing can only be

2 explained by a failure on its part to put forth good-faith and best efforts to maximize receipts from the

3 distribution of Jeopardy! and Wheel of Fortune, in breach of the Agreements. Among the litany of

4 reasons why CBS’s efforts fell far below the threshold of “best efforts” and good faith and fair dealing,

5 two stand out: (1) CBS actively reduces the gross receipts from the Shows by favoring and benefitting

6 its own wholly-owned shows over Jeopardy! and Wheel of Fortune; and (2) CBS’s massive staffing

7 cuts and restructuring have kneecapped its ability to meet its contractual obligations.

8 2. CBS’s Self-Preferencing At The Expense Of Jeopardy! And Wheel of

9 Fortune

10 56. CBS has directly acted against the interests of Sony Pictures by misusing rights given

11 to them under the Agreements to advance its own self-interest in promoting and selling its own much

12 less popular programming. A central term of the Agreements is CBS’s commitment to “use its best

13 efforts,” consistent with “customary practice in the television industry,” with the goal of “secur[ing]

14 the maximum receipts” from Distribution of the Shows. CBS has repeatedly and systematically

15 breached this material contractual term—as well as the implied covenant of good faith and fair

16 dealing—by self-preferencing in at least two ways.

17 57. First, CBS has bundled its own assets with the Shows in procuring licenses to secure

18 value to CBS for its own less popular assets in a way that reduces the gross receipts attributable to

19 Jeopardy! and Wheel of Fortune.

20 58. For example, when CBS negotiates licensing deals for the distribution of Jeopardy! and

21 Wheel of Fortune with local affiliates and station groups, CBS will offer the Shows as part of a larger

22 bundle with other far-less-popular and much-less-marketable shows that CBS wholly owns, like The

23 Hot Bench and The Drew Barrymore Show, diluting and diverting the pool of gross receipts attributable

24 to the Shows from licensing.

25 59. Improper bundling also extends to advertising sales. Knowing that the Shows command

26 a higher price to reach viewers (also known as cost-per-mille or “CPM”), CBS bundles advertising

27 sales for the Shows with CBS’s less popular shows. The net result is inflated gross receipts for the

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COMPLAINT FOR BREACH OF CONTRACT
 1 CBS-owned content in the bundle, but deflated advertising prices for the Shows. The benefit to CBS

2 is apparent: CBS could not otherwise reach audience number targets for its own shows without riding

3 the coattails of Jeopardy! and Wheel of Fortune. And, if the agency or brand purchases the bundle,

4 CBS takes 100% of the gross receipts on its much-less-popular shows, gross receipts that accurately

5 should be attributed to Jeopardy! and Wheel of Fortune.

6 60. CBS’s use of bundling is a material breach of the Agreements in several independent

7 ways. For one, the popularity of Jeopardy! and Wheel of Fortune typically drive the marketability of

8 the bundles, given the limited popularity and audience for CBS’s own television shows. But even
9 though it is Jeopardy! and Wheel of Fortune that drive the bundled licensing and advertising sales,
10 upon information and belief, CBS allocates a portion of the gross receipts from such bundled license
11 and advertising-sales agreements to CBS-owned shows that, in reality, do not have significant market
12 value and that, absent being bundled with Jeopardy! and Wheel of Fortune, would be difficult to license
13 and sell advertisements for. Upon information and belief, CBS also allocates a disproportionate amount
14 of gross receipts to its own less-popular assets.
15 61. What is more, CBS’s bundling of Jeopardy! and Wheel of Fortune with comparatively
16 unpopular CBS-owned shows lowers the gross receipts that CBS would otherwise secure for the Shows
17 had they been sold independently. Indeed, upon information and belief, CBS would often
18 simultaneously offer the Shows to network affiliates outside of the bundle at a premium price and as

19 part of a bundle at a discounted price, reflecting the extent to which CBS’s less popular shows dragged

20 down the value attributable to Jeopardy! and Wheel of Fortune. CBS’s bundling practices are thus in

21 direct and material contravention of its obligations under the Agreements: Instead of using “best

22 efforts” to “secure maximum receipts” from Distribution of Jeopardy! and Wheel of Fortune, CBS has

23 used bundling to sell its own shows and reduce the Distribution receipts.

24 62. Second, CBS has given its wholly-owned shows—on which it owes none of the gross

25 receipts to Sony Pictures—privileged premium placements with local network affiliates, displacing

26 such premium placements for Jeopardy! and Wheel of Fortune. For example, in the Atlanta market,

27 CBS has placed its own show, Entertainment Tonight, at WSB-TV 2.1, the #1 ranked station as

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COMPLAINT FOR BREACH OF CONTRACT
 1 measured by widely-accepted ratings and impressions statistics published by Nielsen. By contrast, CBS

2 placed Jeopardy! and Wheel of Fortune with the #3 ranked station in the market, WXIA-TV 11.1.

3 Similarly, in the Denver market, CBS has secured a premium slot for Entertainment Tonight at the #1

4 ranked network affiliate, KUSA 9.1, while placing Wheel of Fortune and Jeopardy! at the #2 ranked

5 station, KDVR+.

6 63. Placement with a higher-ranked, more popular local television station translates to

7 higher revenues for a show. The most popular network affiliates generate more in advertising dollars,

8 and typically also pay higher licensing fees. Placements at the highest-rated network affiliates also
9 contribute to maximizing revenues for a show in the long term, by ensuring that the series is exposed
10 to the largest market audience, and in turn higher advertising rates in the local market. Ultimately, this
11 leads to a larger market nationally, which translates to a higher ratings number and even higher
12 advertising prices.
13 64. CBS’s motive for securing the top spots for its wholly-owned shows—and in the
14 process preventing Jeopardy! and Wheel of Fortune from occupying those spots—is easy to see. CBS
15 owed none of the gross receipts it received from the distribution of Entertainment Tonight to Sony
16 Pictures. Had CBS secured the top spots for Jeopardy! and Wheel of Fortune, CBS would have owed
17 up to 65% of its gross receipts from those licensing deals to Sony Pictures. But CBS’s decision to
18 protect its own bottom line breached its obligations under the Agreements, namely, its obligations to

19 use its “best efforts” to “secure the maximum receipts” from the Distribution of Jeopardy! and Wheel

20 of Fortune. CBS instead secured maximum receipts for its wholly-owned show Entertainment Tonight,

21 relegating Jeopardy! and Wheel of Fortune to the second or third tier.

22 3. CBS’s Understaffing Has Undercut Its Distribution Efforts.

23 65. Before 2022, CBS had a dedicated marketing team with expertise in syndicated

24 television that handled the marketing, promotions, and affiliate relations for Jeopardy! and Wheel of

25 Fortune, along with dedicated researchers for the syndication market. In the years after CBS merged

26 with Viacom in 2019, that changed as Paramount began sweeping layoffs. CBS handed Jeopardy! and

27 Wheel of Fortune over to a marketing team on its network staff. That team was already responsible for

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COMPLAINT FOR BREACH OF CONTRACT
 1 a full slate of scripted CBS network shows, and lacked the required experience to market syndicated

2 shows airing five days a week, 52 weeks a year. Nevertheless, CBS dropped Jeopardy! and Wheel of

3 Fortune—along with eight other syndicated shows—into the lap of this group. There were no longer

4 the producers who attended the Shows daily to create promotional materials tailored to the episode to

5 send to the affiliates on a regular basis. And the research team dedicated to ratings and syndicated

6 television support was also gutted. In other words, CBS put Jeopardy! and Wheel of Fortune low on

7 the priority list, and as a result failed to make reasonable efforts (let alone “best efforts”) to effectively

8 market and promote the premium Sony Pictures-owned content that CBS was charged with
9 Distributing.
10 66. Over the last 12 months, CBS has further stripped what limited (and itself inadequate)
11 personnel infrastructure it had assigned to administer its Distribution obligations under the
12 Agreements. In February of 2024, CBS’s parent company, Paramount Global, announced that it was
13 laying off 800 employees, or roughly 3% of Paramount’s workforce. Those cuts included CBS
14 personnel who, previously, were responsible for administering CBS’s contractual obligations to Sony
15 Pictures under the Agreements, including members of the team handling advertising sales. Then, in
16 August 2024, shortly after Skydance Media announced its planned takeover of the company,
17 Paramount Global announced another round of cuts—this time affecting 2,000 employees and roughly
18 15% of its U.S. workforce. That second, much larger round of cuts has further depleted the ranks of

19 CBS and Paramount personnel responsible for managing, even if poorly, CBS’s obligations under the

20 Agreements. Given the extent of cuts, it is unsurprising that CBS has informed Sony Pictures that it is

21 planning to outsource advertising sales in their entirety to a third party.

22 67. Over the last year, CBS has also laid off a number of key personnel responsible for

23 administering its foreign distribution obligations under the Agreements. Those cuts included the

24 executives principally responsible for the foreign distribution of Jeopardy! and Wheel of Fortune,

25 including the Senior Vice President and the Vice President of International Formats and various

26 consultants. At present, oversight of foreign-format licensing for the Series has been left to a few newer

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 1 employees with little experience with the foreign-format licensing for the Shows, despite CBS’s

2 obligation to use its “best efforts” to pursue foreign-format licensing under the Agreements.

3 68. Paramount Global has signaled that further cuts are forthcoming, purportedly to achieve

4 $500 million in cost-savings and boost its profitability. Those cuts will further erode CBS’s capacity

5 to execute its material obligations to Sony Pictures under the Agreements. With its latest rounds of

6 layoffs and restructurings, which themselves came after two prior years of cuts, CBS no longer has the

7 capacity to comply with its contractual Distribution obligations. To make up for CBS’s decisions to

8 shortchange and abdicate its obligations, Sony Pictures has been forced to hire additional staff—at its
9 own expense—to preserve the value of these two prized assets.
10 4. CBS’s Failure To Renew Its Critical Nielsen Ratings Contract

11 69. For decades, CBS has relied upon Nielsen’s audience measurement systems for data on

12 viewership composition, audience size, and audience engagement in order to carry out its Distribution

13 obligations. Such information is instrumental: It is used to determine advertising rates and in turn

14 achieve advertising sales; to allocate unsold advertising inventory; to maximize syndication licenses;

15 and to steer marketing efforts in local markets. For those reasons, it is also critical to CBS’s Distribution

16 obligations under the Agreements, including maximizing advertising sales and syndication licenses.

17 Yet, Paramount Global and CBS have been left without access to Nielsen ratings since October 1,

18 2024. The lapsed coverage is the direct result of Paramount Global’s decision to walk away from

19 negotiations to renew its longstanding agreement with the ratings provider. The failure to renegotiate

20 the Nielsen contract is yet another example of CBS breaching the “best efforts” provision of the

21 Agreements.

22 * * *

23 70. CBS’s breach of its contractual obligation to use its “best efforts” to “secure the

24 maximum receipts” from the Shows’ Distribution, and its breach of the implied covenant of good faith

25 and fair dealing, are material and ongoing breaches of its longstanding Agreements with Sony Pictures

26 for the Distribution of Jeopardy! and Wheel of Fortune. These breaches go to the heart of the

27 Agreements, justify termination of the Agreements, and entitle Sony Pictures to damages. Sony

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 1 Pictures provided notice of these breaches to CBS in a letter dated October 31, 2024. Sony Pictures

2 has done so without waiving its right to contend that notice was not required under the applicable law

3 due to, among other things, the incurable nature of the breaches. Regardless, if those breaches and the

4 injury they have caused are not remedied by November 30, 2024, Sony Pictures will take appropriate

5 action to amend this Complaint to assert claims for breach of contract and breach of the implied

6 covenant of good faith and fair dealing arising out of CBS’s breaches of its obligations under the

7 Agreements. Sony Pictures reserves all rights.

8
CAUSE OF ACTION
9 Breach of Contract
(Against All Defendants)
10

11 71. Sony Pictures repeats and realleges the allegations contained in the paragraphs above
12 as if fully set forth herein.
13 72. The Agreements constitute valid and enforceable contracts between Sony Pictures and
14 CBS.
15 73. Sony Pictures Television Inc. is an intended third-party beneficiary under the
16 Agreements.
17 74. Sony Pictures has complied with and performed its obligations under the Agreements.
18 75. Pursuant to the Agreements, CBS may not enter into foreign licensing agreements that

19 last longer than two years, or otherwise violate the scope of the distribution rights provided under the

20 Agreements. These terms are material to Sony Pictures.

21 76. CBS materially breached the Agreements by (1) entering into the Unauthorized Deals

22 and (2) wrongfully retaining distribution fees from the Unauthorized Deals.

23 77. CBS’s material breaches have damaged Sony Pictures in an amount to be determined at

24 trial.

25 PRAYER FOR RELIEF

26 WHEREFORE, Sony Pictures requests the following relief:

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 1 1) An Order awarding Sony Pictures damages in an amount to be proven at trial and any

2 such other monetary relief as the Court deems proper.

3 2) An Order awarding Sony Pictures reasonable attorneys’ fees and costs.

4 3) An Order awarding pre- and post-judgment interest on the above amounts as allowed

5 by law.

6 4) An Order for any and all other relief the Court deems just and proper.

8 Dated: October 31, 2024 SUSMAN GODFREY L.L.P.

9
By:
10 Marc M. Seltzer
Attorneys for Plaintiffs Sony Pictures Television
11 Inc.; Jeopardy Productions, Inc.; and Califon
Productions, Inc.
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 1 DEMAND FOR JURY TRIAL

2 Sony Pictures hereby demands a jury trial.

4 Dated: October 31, 2024 SUSMAN GODFREY L.L.P.

5
By:
6 Marc M. Seltzer
Attorneys for Plaintiffs Sony Pictures
7 Television Inc.; Jeopardy Productions, Inc.;
and Califon Productions, Inc.
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