AMC Networks arrived at a $200 million settlement with Frank Darabont and CAA, in the profit participation lawsuit over “The Walking Dead.” AMC Networks will pay Darabont and CAA, $200 million as they receive a share of future profits from all streaming deals for “The Walking Dead” serial and the spinoff “Fear the Walking Dead.” But other “Walking Dead”-related contents and rights are vested in AMC Networks, which disclosed settlement details in a SEC filing recently. Darabont and CAA representatives offered no comments. AMC Networks failed to elaborate beyond the SEC filing. AMC disclosed the payment which wipes out the company’s free cash flow for 2021, which AMC executives forecast to Wall Street analysts at a May 2021 earnings call.
The settlement includes $57 million in profit participation revenue which AMC intended to pay the plaintiffs as per the original signed contracts. Writer-director Darabont who launched the show in 2010 that became a money-spinner for AMC, filed suit in 2013 against the company after his dismissal from the show. CAA as the representative for Darabont, had a double stake in the claim, as they had packaged the series, and had a profit participation stake in the show. With Darabont and CAA filing the first salvo, comic book creator Robert Kirkman, executive producer Gale Anne Hurd, show-runner Glen Mazzara and David Alpert and Charles Eglee , both exec producers filed similar suits in 2017, which remain pending in the Los Angeles Superior Court and the trial begins in November. In 2018 Darabont filed another suit claiming some fiduciary abuses by AMC related to the profit participation deal.
Both of those cases were combined by the judge and duly settled now. “The Walking Dead” lawsuit highlighted conflict over traditional Hollywood accounting techniques besides reflecting the conflict spurred on by industry consolidation as AMC had a double role, as the production house behind “Walking Dead” and also the distribution network, leading to lawsuits claiming that AMC failed to pay it’s studio, fair market value as the Walking Dead became the most-watched program on TV.
Litigation about sweetheart deal allegations that short-change profit participants are becoming a specialty for Hollywood litigators with regulatory landscapes changing in the late 1990s, to permit vertical integration of studios and networks. The Darabont settlement enables AMC Networks to move ahead with more “Walking Dead” projects, and many projects are on the drawing board. The Hurd case pending becomes narrow in scope after a judgement in AMC’s favor confirmed that the original definition of profit in the contracts remains valid. The “Walking Dead” series will end next year after Season 11, (with 24 more original episodes). AMC officials for “Walking Dead Universe,” plan a live-action spinoff based on characters portrayed by Melissa McBride and Norman Reedus as also an anthology series involving many other characters. AMC Networks views the “Walking Dead” theme as fit for exploitation in the immersive experience arena and for live events. The settlement with writer-producer Darabont is noteworthy as he launched “Walking Dead” in 2010, and felt entitled to profit participation rights for merchandising, spinoffs, and everything related to that property, which included the after-show series “Talking Dead” aired by AMC, after each instalment of the “Walking Dead”.