The long-running legal battle over Frank Darabont’s profits from The Walking Dead has come to an end, with AMC Networks making a nine-figure payout to the former showrunner and his agency, CAA.
Darabont first sued in 2013, and the battle eventually spawned a spinoff in 2018. He and CAA claim the network had used shady accounting to short them on profits. The fight largely examined the dealmaking behind AMC’s hit and centered on how to calculate its net profits.
While other hit AMC shows like Mad Men and Breaking Bad were produced by other studios, Walking Dead was the first series that AMC both produced and distributed. So this dispute served as a test case on profit sharing and vertical integration, an increasingly relevant issue as self-distributed content is prevalent in the streaming world.
The original judge seemed to favor Darabont and CAA. In fact, AMC fired its original lawyers at Kasowitz and replaced them with Gibson Dunn. The new team was able to stave off a summary judgment loss and was prepared to make the trial all about how Darabont had been represented in the original contract negotiation by sophisticated lawyers and agents, and was merely trying to use litigation to renegotiate a better deal.
In April, an appeals court trimmed Darabont’s case, but the key issue of interpreting the contract was set to go to a jury in April 2022.
The settlement resolves all litigation and buys Darabont and CAA out of most of their rights to the intellectual property from the franchise.
“The Settlement Agreement provides for a cash payment of $200 million (the “Settlement Payment”) to the plaintiffs and future revenue sharing related to certain future streaming exhibition of The Walking Dead and Fear The Walking Dead,” states AMC’s July 16 report to the U.S. Securities and Exchange Commission. “The Company has taken a charge of approximately $143 million in the quarter ended June 30, 2021 in consideration for the extinguishment of Plaintiffs’ rights to any compensation in connection with The Walking Dead and any related programs and the dismissal of the actions with prejudice, which amount is net of approximately $57 million of ordinary course accrued participations. The Settlement Agreement also includes customary provisions included in such agreements, including providing for mutual releases, covenants not to sue, waivers, confidentiality, non-disparagement and indemnification for third party claims.”
Neither party is commenting beyond the SEC filing.
The parallel fight from other profit participants, including Walking Dead graphic novel creator Robert Kirkman, is ongoing and currently scheduled for trial this November, with a June backup date set in case of a pandemic delay. AMC’s lawyers say Darabont’s settlement doesn’t impact that litigation.