The Walking Dead: Fight over profits worth watching as streaming services rise

The Walking Dead is a profit machine for AMC but who benefits from the profits?

It’s an important bit of the business side that doesn’t often get mentioned when discussing The Walking Dead, but it does matter. Robert Kirkman, who created the comics, and business partner David Alpert, has sued network AMC, claiming the network has taken more than its fair share of the profits.

That’s one of three lawsuits in process, as of earlier this year. Frank Darabont, who served as The Walking Dead’s showrunner for the first two seasons, has also sued, as has his agency, Creative Artists Agency.

AMC is denying these claims. Among the accusations the network denies is so-called “self-dealing.” In that scenario, studios sell a show to networks it owns at less than fair market value, which results in lower profits, and lower profits to share.

At least one legal expert tells The Los Angeles Times there will be more legal challenges of this sort, because of the way streaming deals are done.

The Walking Dead is the first show that AMC Networks developed independently. Now, Darabont, CAA, Kirkman, and Alpert are all suing because they believe they aren’t getting their fair share.

Self-dealing isn’t the only accusation. The plaintiffs also allege that AMC didn’t reveal how it calculated its profit split until after the show became successful, and that the formula used to calculate licensing fees was low – below fair market value.

A second lawsuit filed by Darabont and CAA claims an audit showed AMC engaged in “wrongful conduct” in its profit calculations. The two suits have been combined and the matter is scheduled to go to trial this summer in New York City.

Other producers have leveled similar claims against AMC. One bit of evidence is that license fees were larger for shows that lower ratings.

This isn’t just about The Walking Dead and whether AMC did or did not perform accounting that was unfair or even illegal. Rather, there may be structural change to deals as streaming services become more and more popular.

Studios might compensate creators via a flat fee upfront, as opposed to payments made based on how the show fares once it’s aired. That would allow studios to avoid costly litigation, but it could reduce potential earnings for content creators.

This situation bears watching – potential changes in the business model could lead to changes in which shows get aired and which don’t. Content that shows potential right away could command higher fees, while shows that might grow slowly and gain strength (and profits) due to critical acclaim and word of mouth leading to binge-watching might be a harder sell upfront.

As for AMC and The Walking Dead universe, it’s unclear what will happen, but if the litigation process reveals shady business on the part of AMC, it could cause future producers and showrunners to hesitate about working with AMC. Deals for future TWD spinoffs might be done differently, too, to protect all parties.

Coronavirus has pushed the trial back, but already, the court has struck down the secondary suit from CAA.

The pandemic is overshadowing what may happen here, but it’s worth keeping an eye on.