AMC has survived stiff Sunday night competition against The Walking Dead to keep its flagship series' title as most-watched 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 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.
Darabont and his agents submitted their lawsuit seeking a damages verdict in excess of $280 million in late 2016. AMC has stood firmly against all claims thrown at them by Darabont's team.
"Plaintiffs' damages claim has no basis in reality and we will continue to vigorously defend against this lawsuit," said AMC in a statement to THR.
Darabont served as the co-creator and showrunner of The Walking Dead through its first six-episode season and was fired from the production half way through the second. Following his departure, AMC licensed the series to its cable affiliate network for an amount of money which Darabont's team claims was not enough.
Darabont's team claims the network should be imputing $30 million per episode, which over seven season would sum up to hundreds of millions of dollars more than AMC has booked in its revenue.
Darabont's contract entitled him to as much as 10 percent of certain The Walking Dead profits after deductions. Given the amount his team is filing for in damages, the numbers suggest that the AMC series has hauled in mutlipe billions of dollars.
The trial also highlighted the circumstances surrounding Darabont's departure from the series. Darabont is alleged AMC improperly reduced his profit share by not counting his efforts on the show's second season as being involved all year, claiming to have worked on all episodes of the second season. A judge allowed the claim after an initial deposition from Darabont which revealed the "crisis-level problems" on the show.
Despite the lawsuit, it does not appear AMC sees The Walking Dead going anywhere any time soon -- unless the network truly had no clue of the impending filing.
AMC Networks purchased Riverwoods Studios, a company which had been operating under Raleigh Studios in Atlanta, Georgia, from Kudzu Productions LLC where The Walking Dead is produced just a week ago.
The nearly 80,000-square-foot studio houses The Walking Dead and only The Walking Dead on its four stages, acres of land, and various other on-property locations. It is the only studio in the country which dedicates all of its resources to one production year-round. The network bought the studio for $8.25 million.
While operating under Raleigh Studios, the studio has housed The Walking Dead since 2011. The second season was when the show started to call the location home, and it has since expanded to build the Hilltop location, the Oceanside houses, and the prison in Seasons Three and Four which has since been transformed into Negan's Sanctuary.
In fact, both the interior and exterior of a particular stage have been transformed into the show's popular villain's hideout, and despite popular belief, the prison location which it served as earlier in the series was created on the studio's lot and was never actually a Georgia prison.
Other sets built and housed by the studio include Father Gabriel's church which was torn down and, ironically enough, became the location of Negan's introductory beatdown of Glenn and Abraham. As for the Woodbury, Alexandria, and Terminus locations -- each was and is a real-world location dressed up to fit the apocalyptic vibes offered by The Walking Dead's zombie world.
The purchase by AMC should serve as an indicator of how long they plan to make The Walking Dead last. Purchasing the studio is not only an investment for future endeavors at the network but also proves The Walking Dead is not going anywhere any time soon. The cable juggernaut still nabs well over 12 million viewers on a down ratings week. For comparison, The Walking Dead's spinoff series Fear the Walking Dead was renewed for a fourth season while earning about four million viewers on an up week.
The news of the lawsuit comes just days after Kirkman penned a new deal with Amazon to launch new Skybound titles on the streaming service.
Kirkman and Skybound will develop new television series to debut exclusive on Amazon's Prime Video streaming service. Bryan and Sean Furst, Skybound Entertainment's co-presidents of film and television, will oversee the Amazon project slate, along with Kirkman and Skybound co-founder and The Walking Dead co-executive producer David Alpert.
“Robert is a gifted storyteller who shares our passion for elevated genre storytelling that pushes boundaries,” said Sharon Tal Yguado, head of event series for Amazon Studios. “Robert and the team at Skybound are some of the most innovative and fearless creatives in the business. Together, we plan to explore immersive worlds and bold ideas for Prime Video.”
Outside of Kirkman's best known work with The Walking Dead in both comics and on AMC, the writer has crafted some other popular titles with Skybound and Image Comics. Among them are Invincible (which has a movie in development from Seth Rogan and Ian Goldberg), Outcast (which became a TV series on Cinemax), and the Walking Dead spin-off series Fear the Walking Dead.
“At Skybound Entertainment we strive to tell the best stories in the most unique and creative ways in an effort to always break new ground,” said Kirkman. “A forward thinking company like Amazon is the perfect home for us. Their new foray into genre fiction has us at peak optimism for what can be accomplished during this unprecedented partnership. Sharon Tal Yguado has been an instrumental force in the success of Walking Dead and Outcast from day one. Being able to not only continue that relationship, but also expand it into new territory with the vast resources of Amazon, means great things are ahead for myself, David Alpert, Skybound and fans of awesome entertainment. Look out world, here we come!”
Sitting out The Walking Dead lawsuit are executive producer Greg Nicotero and showrunner Scott Gimple.
Nicotero was with the AMC series in its earliest days, serving as a VFX supervisor, and would direct his first episode in the show's second season. He was bumped up to executive producer in the same season.
Gimple stepped in as showrunner on the AMC series following Mazarra's exit for the show's Season 4 premiere, which happened to be directed by Nicotero. Gimple also joined the sibling series Fear the Walking Dead as an executive producer for its fourth season.
The Walking Dead's sibling series Fear the Walking Dead returns September 10th. The Walking Dead will return for its eighth season on October 22, 2017. The Season Eight premiere will mark 100 episodes overall for the popular AMC series. For complete coverage and insider info all season long, follow @BrandonDavisBD on Twitter.