The creator of the “Walking Dead” television series accuses AMC of cheating him out of millions of dollars in profits from the zombie hit.
AMC, which produces the series, allegedly charged its own cable network an “artificially low” license fee to carry the show, according to a lawsuit filed by Frank Darabont Tuesday.
“The sole goal of this sham transaction is to enhance the profits of the parent company by minimizing the revenues that go into the ‘pool’ of funds for the show’s profit participants,” the complaint said.
Frank Darabont worked for years to develop the television series from Robert Kirkman’s comic book series, the lawsuit said. It became a “monumental hit” for AMC when it debuted in 2010, it said.
“Despite four seasons of unprecedented programming success and profitability for defendants, Darabont has not received and may never receive one dollar in profits for developing the series,” the suit said.
Darabont, who wrote, directed and produced the first season, was fired by AMC during the second season. The lawsuit contends he was replaced as the showrunner so that AMC could avoid negotiating a new deal with him.
AMC and its lawyers did not immediately respond to the court filing.
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Darabont’s complaint points to the difference between the fee AMC charges its own company for each “Walking Dead” episode compared to the license fee paid to a third party for the AMC series “Mad Men” as evidence of the company’s “improper and abusive practice of ‘self-dealing.'”
The “Mad Men” production company gets $3 million per episode from AMC, while the fee is just $1.45 million per “Walking Dead” episode. The drama about a 1960s New York ad agency draws just 25% of the audience that the series about the survivors of a zombie apocalypse gets, the lawsuit said.
Darabont and CAA — the Hollywood talent agency that helped him pitch the show to AMC — have been deprived of “tens of millions of dollars of profits from the series,” the suit said. The contract provides that they get a total of 20% of the “Modified Adjusted Gross Receipts,” which is a pool of all the money brought in by the production with the production costs subtracted.
“License fees can be manipulated, however, when the entity producing the show and the entity broadcasting it are controlled by the same parent company, or where the network owns and/or controls the production company,” the complaint said.
After two years, the accounting claimed a $55 million deficit in the pool, the lawsuit said. AMC paid itself nearly $49 million in license fees, but production costs totaled $104.5 million, the suit said. The deficit grows with each season, it said.