The deal calls for AMC Networks to pay Darabont and CAA a total of $200 million. They will continue to receive a share of future profits from streaming deals tied to “The Walking Dead” and spinoff “Fear the Walking Dead.” But for all other “Walking Dead”-related content, the settlement buys out the plaintiffs’ rights.
AMC Networks disclosed the settlement in a Securities and Exchange Commission filing on Friday. Representatives for Darabont and CAA declined to comment. AMC Networks did not elaborate beyond the SEC filing. AMC had to disclose the payment because it will essentially wipe out the company’s free cash flow for 2021, a big change from the $200 million that AMC executives forecast for full-year 2021 to Wall Street analysts during an earnings call in May.
The $200 million settlement includes $57 million worth of profit participation revenue that AMC had intended to pay the plaintiffs under the terms of the original contracts for “The Walking Dead.” Darabont, the writer-director who launched the show in 2010 that became a juggernaut for AMC, filed suit against the company in 2013 after he had been dismissed from the show. CAA had a stake in the claim as the representative for Darabont and as the agency that packaged the series, thus giving it a profit participation stake in the show as well.
After Darabont and CAA filed the first salvo, “Walking Dead” executive producers Gale Anne Hurd, comic book creator Robert Kirkman, showrunner Glen Mazzara and exec producers David Alpert and Charles Eglee filed a similar suit in 2017. That suit is still pending in Los Angeles Superior Court, with a trial expected to begin in November.
Meanwhile, Darabont filed another suit in 2018 claiming other fiduciary abuses by AMC related to the profit participation deal. The settlement announced Friday settles both of those cases, which had been combined by the judge.
“The Walking Dead” lawsuit became the latest forum for conflict over traditional Hollywood accounting techniques. It also reflected the conflict spurred by industry consolidation as AMC served as both the production entity behind “Walking Dead” and the network, which led to the lawsuits claiming that AMC did not pay its own studio fair market value for the show that at its peak was the most-watched entertainment program in all of TV.
Litigation around allegations of sweetheart deals that short change profit participants have become a specialty for Hollywood litigators for years now ever since the regulatory landscape changed in the late 1990s to allow vertical integration of networks and studios.
The settlement with Darabont makes it easier for AMC Networks to move forward with future “Walking Dead” projects, and there are many on the drawing board. The case pending with Hurd and the others is narrower in scope after a judge ruled in AMC’s favor that the original profit definition in the original contracts was valid.
The mothership “Walking Dead” series is set to end next year with Season 11 and 24 more original episodes. Scott Gimple, chief content officer for “Walking Dead Universe,” is steering a live-action spinoff featuring the characters played by Norman Reedus and Melissa McBride as well as a planned anthology series involving other characters. AMC Networks also sees “Walking Dead” as ripe for exploitation in the live event and immersive experience arena.
The settlement with Darabont is significant because the writer-producer who launched “Walking Dead” in 2010 had claimed profit participation rights on all spinoffs, merchandising and anything related to the property, including the “Talking Dead” after-show series that AMC airs after original “Walking Dead” installments.