Entertainment, Legaleze

Walking Dead producers claim fraud in lawsuit

The filing of a lawsuit by the active producers of the Walking Dead could be a stake in the heart of the most popular television series not named Game of Thrones.   The suit comes as an active lawsuit filed over a year ago by series creator Frank Darabont heats up.  The series’ writer/producer was fired by AMC in the second season.  He has claimed wrongful termination and fraud on the part of AMC.  AMC denies the claim.


In July the defense presented emails from Darabont to AMC execs that paint him as an abusive asshole.

In one June 2011 email to executive producer Gale Anne Hurd and others, he wrote, “Fuck you all for giving me chest pains because of the staggering fucking incompetence, blindness to the important beats, and the beyond-arrogant lack of regard for what is written being exhibited on set every day. I deserve better than a heart attack because people are too stupid to read a script and understand the words. Does anybody disagree with me? Then join the C-cam operator and go find another job that doesn’t involve deliberately fucking up my show scene by scene.”

That wouldn’t be the only profane rant that month. In one email, Darabont asked why camera operators were being paid when “Ray Charles could operate better.” In yet another, he compared one of the show’s directors to someone whom he’d formerly worked with who had suffered massive, debilitating strokes. “It’s like we yanked some kid with no experience out of high school and put her in charge of directing a show,” wrote Darabont.

And to AMC’s executives, he was no less polite. “Please let’s stop invoking ‘the writers room,'” he emailed AMC’s Ben Davis. “There IS no writers room, which you know as well as I do. I am the writers room. The fucking lazy assholes who were supposedly going to be my showrunners threw that responsibility on me after wasting five months of my time.”


Darabont, the Oscar nominated writer/director of Shawshank Redemption, claims he was under enormous pressure during this period. The first season of Walking Dead was a hit. But AMC cut funding on the series across the board causing the exec producer to find creative ways to make up the difference.    He claimed of sleepless nights, high blood pressure and severe chest pains as a result.


AMC terminated Darabont in the middle of season two and promoted Glen Mazzara who was fired not long after.   After the firing Darabont began looking at his paycheck as the Walking Dead became more and more of a cultural phenomenon, with rating exceeding sports telecasts, something unheard of in television.


As the show grew, so too did the excuses of AMC execs as to why the creator of the tv series was not getting any of the backend money.  The answer was simple. The show may have been a creative hit, but the series was in the red.   The studios claimed there was no profit participation because, on the backend, there were no profits.


Lawyers see it differently…


…Darabont’s lawsuit addresses how creatives (and their agents) get compensated when studios producing content share a parent company with the outlet distributing the content. Past lawsuits like the groundbreaking one over Coming to America in the early 1990s against Paramount Pictures or the equally revealing trial over the Police Academy films a decade later against Warner Bros. showcased how “Hollywood accounting” can make profits disappear under a fog of distribution fees and questionable packaging practices.

Darabont’s agents and deal attorneys thought they had figured out a way to protect him. They allege that when it came time to negotiate how AMC’s studio arm would license Walking Dead to the AMC network, they obtained a specific protection aimed at ensuring a fair share of profits. Despite allegedly getting what they wanted, however, participation statements would until recently show Walking Dead in the red. For example, a March 2014 statement to Darabont represented that the drama had earned more than $159 million in total gross receipts from inception to September 2013. But then came $13 million in distribution fees, another $11 million in distribution charges, and $160 million in production costs which included 12.5 percent for administrative overhead. That meant Walking Dead was allegedly in deficit to the tune of nearly $24 million, leaving profit participants empty.


Furthermore,  attorneys for the director and his agent CAA (also a profit participant who is suing) claim AMC is in breach of its agreement to avoid “inter company self dealing”.   Lawyers claim the reason there are no profits to be shared with clients, is the studio cut a sweetheart deal with its distributor, which was itself.   To avoid the possibility of this, agents put a clause in Darabont’s contract that AMC would agree to…


…conduct its transactions with affiliated companies “on monetary terms comparable to the terms” made with non-affiliated companies.


Lawyers point to examples of non affiliated shows like Breaking Bad (and its prequel Better Call Saul) and Mad Men which both ran on AMC but were produced by different companies (Mad Men by Lionsgate and Breaking Bad by Sony). In those cases, the studio took in huge amounts of money per episode as the series grew.   For instance, in its final season Lionsgate was being paid approx. 4 million per episode for Mad Men whereas the Walking Dead, for four seasons, was getting 1.45 million and between 1.87 and 2.4 million thereafter.  Few observers doubt Man Man was a bigger hit on television than the Walking Dead.


Darabont believes, all things being equal, he has lost out on significant profits and is seeking $280 million in damages.


Whether the producers still on board the series have been paying attention to the Darabont lawsuit or not, Monday they filed a lawsuit of their own.  Gale Ann Hurd, Alex Kirkman, Glen Mazzara and David Alpert are all suing for part of the backend on the series. They say they have all been cheated out of their cut of the show.  Observers believe the suit, which could see damages as large as 1 billion, could end up as the largest judgement in Hollywood history if the producers succeed.


For its part AMC says.

  1. The company took a huge risk taking on the Walking Dead and should not be punished for it.  In court papers they note Darabont could not get the show setup anywhere else. NBC had the series in turnaround because it could not or would not produce it.
  2. Darabont deserved to be fired for cause after his abusive emails and texts.  But they never fired him, simply paid him to leave.
  3. The agreement between the parties only assured the deal they made with him had to be most favorable to Darabont and at that time only Steven Spielberg had ever gotten a better deal in the history of the company.
  4. You cannot compare the deal between AMC and other shows because they are irrelevant and that the fees were fairly negotiated.

At the Hollywood Reporter’s Eriq Gardner put it:


…the fight over how AMC has treated accounting on the most successful cable television show ever will be felt in the industry for quite some time. It will surely influence new dealmaking moving forward.

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