AMC has survived stiff Sunday night competition against The Walking Dead to keep its flagship series’ title as top-viewers on cable but it will now have to endure an intimidating lawsuit.
On Monday, in what might turn out to be one of the biggest profits cases in television history, The Walking Dead‘s co-creator Robert Kirkman and series producers Gale Anne Hurd, Glen Mazzara, and David Alpert have filed suit against AMC. The group claims to have been cheated by the network regarding profits and their fair share — a number which could total a billion dollars according to former showrunner Frank Darabont’s attorneys.
“This case arises from a major entertainment conglomerate’s failure to honor its contractual obligations to the creative people – the ‘talent,’ in industry jargon – behind the wildly successful, and hugely profitable, long-running television series The Walking Dead,” opens the complaint filed Monday in Los Angeles Superior Court. “The defendant AMC Entities exploited their vertically-integrated corporate structure to combine both the production and the exhibition of TWD, which allowed AMC to keep the lion’s share of the series’ enormous profits for itself and not share it with the Plaintiffs, as required by their contracts.”
Following the lead of former showrunner Darabont’s (who was fired as executive producer in The Walking Dead‘s second season) case, the plaintiffs are seeking to question the amount “paid” by AMC Network to AMC’s studio arm for the right to air The Walking Dead — a title based on Kirkman’s comic books.
On AMC’s profit participation statements are imputed license fees, which serve as a stand-in figure which does not actually indicate money has changed hands For the first four seasons of The Walking Dead, the fee sat at $1.45 million per episode. The number has since risen to $2.4 million. Still, the fee is less than the non-imputed license fees of Better Call Saul and Mad Men, which are produced by non-affiliated Sony and Lionsgate, respectively.
“There can be no question that, if AMC Studio[s] and AMC Network were not part of the same conglomerate, the story would be very different,” states the complaint. “Those substantial license fees for Mad Men and Breaking Bad continued in seasons five and beyond, even though their ratings were a fraction of TWD’s. And while the AMC Network only obtained a limited number of playdates for those series as part of the comparatively-higher license fees it paid for them (both on television and its affiliated websites), the AMC Entities unilaterally took for themselves the right to run an unlimited number of runs of TWD in perpetuity on all AMC platforms.”
Krikman, Hurd, Mazzara, and Alpert have not yet pinpointed a price point on what the imputed license fee should be. However, they are also aiming at deductions taken by AMC for payments to other The Walking Dead profit participants and are objecting to AMC’s choice to turn down a third party looking for internation rights to the series “so that [AMC] could do a related-party deal for much less than the related party offered, again keeping the profits at conglomerate level and not passing them through to AMC Studios and the participants.”
Kirkman’s deal entitles him to 5 percent of The Walking Dead’s profits, while Hurd’s earns 7.5 percent, Alpert earns 2.5 percent, and former showrunner Mazzara earns 1.5 percent. Each cite provisions to their respective deal incluing most-favored-nations clauses which culminate to self-dealing protection. As THR puts its, “the Walking Dead executive producers say they thought they had it all figured out only to be blindsided.