Kind of a strange clause if true.
Why would Paramount hinge a strategic business decision on what a rival studio would do?
There was/is a post in AVS that talked about this (by an insider, I was told). I can't find it but read a paraphrased version. It seems that the Paramount exclusive contract has 2 milestones/requirements. Both are unmet.
* Another major manufacturer joining HD DVD. That went to the drain because of the super low player price.
* Warner joining HD DVD exclusively by Q1 2008. That didn't materialize either.
If true, Paramount may not be bound by the contract anymore.
Remember, this is from a forum post.