Filmmaker Frank Darabont, who developed Robert Kirkman's hit Image Comics series The Walking Dead for television, is suing AMC--the network who produced and exhibited the series in the U.S.--over a profitsharing dispute.
Darabont, who claims he was wrongfully terminated from the show, also says that AMC was “self dealing” by setting an unrealistically low license fee for the series it also produces and employing questionable accounting practices thus depriving profit participants of compensation. This is basically the same claim that Smallville creators Alfred Gough and Miles Millar brought against Warner Bros.
“Despite four seasons of unprecedented programming success and profitability for [AMC], Darabont has not received and may never receive one dollar in Profits for developing the Series,” the complaint alleges.
Those allegations may sound familiar; The Walking Dead's original artist Tony Moore, who has long claimed that he was removed as "co-creator" of the series in the credits by creator Robert Kirkman between the solicitation and publication of the first issue without his knowledge or consent, made similar allegations in his most recent lawsuit against Kirkman. That suit claimed that Moore was owed 60% of the comics revenue and 20% of the TV/movie revenue generated by The Walking Dead as the result of a previous settlement, but at the time he had received very little money. He also alleged that representatives for Skybound, AMC and Kirkman “have not issued a single statement or allowed access to their books and records in accordance with the reporting obligations of the agreement.” Kirkman responded that the suit was “totally frivolous. Mr. Moore is owed no money at all.”
That suit was later settled under undisclosed terms before it went to trial.
Darabont and company are asking for a new definition of net profit, because the licensing deal that AMC has on the series more or less guarantees that it will always be in debt and will never (on paper) generate profits to share with its partners.
Here's the long and short of it, again from Deadline:
The suit alleges that the instituted by AMC license fee, $1,450,000 per episode, covers about 65% of the costs of production, meaning that The Walking Dead is certain to run a deficit for every episode it ever produces. The suit quotes the latest participation statement issued by AMC, dated September 30, 2012, where “the cumulative imputed license fees reported by AMC through Season 2 totaled $48,656,742, whereas AMC listed the costs of production at $104,518,536,” meaning that on paper, The Walking Dead “had an unconscionably high deficit of greater than $55,000,000 before the third season premiered.” There is also interest on the deficit and overhead charges that are are added on top of production costs, pushing the deficit to $71,000,000. This suit expects that deficit “to increase exponentially” each season “because the production costs and interest charges will grow at a greater rate than the improper self-dealing license fee.” Also skewing the balance sheet, according to the complaint, is the fact that AMC’s accounting does not factor in the 30% tax credit from Georgia, where the series is shot, in its production costs estimates. Darabont and CAA are now asking for a better net profit definition.
Precedent from previous, similar "self-dealing" lawsuits suggests that there will be a settlement before the case reaches trial.