The Walking Dead’ Producers Settle Profits Dispute With AMC
Steven T. Lowe
On July 16, 2021, the AMC Network settled a lengthy lawsuit with “The Walking Dead” creator Frank Darabont, Creative Artist Agency LLC, and two of Darabont’s production companies, for $200 million.
Darabont developed “The Walking Dead” and served as executive producer from 2010 to 2011. In 2010, AMC Studios licensed the series for broadcast to its corporate affiliate, AMC Network. In 2013, Darabont and CAA filed a lawsuit against AMC Studios, accusing AMC Studios of breaching its contract by using shady accounting practices (as between AMC Studios and AMC Network) to shortchange Darabont on profits.
While the case was set to go to a jury trial in April 2022, AMC’s settlement resolved all litigation and also bought out Darabont and CAA of most of their rights to the intellectual property from which the popular zombie apocalypse television show was derived.
According to AMC’s July 16, 2021, Form 8-K report to the U.S. Securities and Exchange Commission, the settlement agreement includes a $200 million cash payment and future revenue sharing related to future streaming of “The Walking Dead” and “Fear the Walking Dead.”
In 2010, Darabont entered into an agreement with AMC Studios regarding compensation with respect to the Series. Under this agreement, Darabont was entitled to an “imputed license fee” that is comparable to the terms on which AMC enters into similar transactions with unrelated third-party distributors for comparable programs. In other words, even if AMC Studios did business with AMC Network, AMC Studios would have to charge AMC Network the same amount AMC Studio would charge an unrelated third party. In 2013, Darabont and CAA first sued AMC for violating this agreement, alleging that AMC set an artificially low license fee that, in turn, lowered the profit participation to which they were entitled. Darabont and CAA contend that because of this alleged breach, AMC has underpaid Plaintiffs by more than $280 million.
Darabont and the other plaintiffs are represented by Jerry D. Bernstein and Nicholas R.Tambone of Blank Rome LLP and Dale F. Kinsella, Chad R. Fitzgerald, and Aaron C.Liskin of Kinsella Weitzman Iser Kump LLP.
AMC and the other defendants are represented by Orin Snyder, Brian C. Ascher, Lee R.Crain, Scott A. Edelman, and Ilissa Samplin of Gibson Dunn & Crutcher LLP.
The case is Frank Darabont et al. v. AMC Network Entertainment LLC et al., case number 650251/2018, in the Supreme Court of the State of New York, County of New York.
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