‘Walking Dead’ profits run away
AMC’s zombie apocalypse drama The Walking Dead quickly became one of the most successful shows in television history after its debut in 2010. But its creators are now claiming they haven’t received their fair share of its record-setting profits.
On Monday, many key members of the show’s creative team – including co-creator Robert Kirkman and series producers Glen Mazzara, David Alpert and Gale Anne Hurd – sued AMC in Los Angeles Superior Court, claiming the network hasn’t fairly compensated them.
Kirkman’s comic books provided the source material for the show.
The lawsuit follows one filed by the show’s other co-creator, Frank Darabont, who was fired in the second season. Darabont claimed the network hasn’t fairly compensated him, especially considering the show’s tremendous success.
The alleged rip-off stems from the fact that AMC owns both the company that produces the show (AMC Studios) and the one that airs it (AMC Network), which is a relatively new form of “vertical integration” in the television world.
Understanding the lawsuit and its potential significance requires some background on how television shows have been made.
Traditionally, two separate parties, a studio and a broadcast or cable channel, are involved. The studio creates the show and the broadcast/cable channel airs it.
Seinfeld, for instance, was produced by Castle Rock Entertainment but aired by NBC.
This set-up dictated how the profits were managed. The production company would allow the network to air its show for a licensing fee. It would then pay the talent – writers, producers, actors, etc – a percentage of that fee.
“The money that talent gets is dependent on the licensing fee that’s paid from the cable channel to the production company,” said Jonathan Handel, a University of Southern California’s law school lecturer and author of “Entertainment Residuals: A Full Color Guide.”
By an FCC regulation called the Financial and Syndication or Fin-Syn Rules, instituted in 1970, the production company and the broadcast/cable channel had to be completely separate entities. They could not have financial ties to each other.
But during the Clinton administration, those rules were eliminated after heavy lobbying by the networks, allowing a studio and a production company to be owned by the same corporation. This led to some big mergers, such as ABC with Disney.
It also led to smaller channels like AMC owning their own production studios. Having both companies – in this case, AMC Studios and AMC Network – owned by the same parent company created the potential for financial abuse.
“Since money is changing pockets in the same pair of pants, there’s an incentive for the production company and the cable channel to agree on what might be something of a low-ball figure. Because it’s all just money being transferred within the same corporate parent,” Handel said.
That’s what the plaintiffs claim happened in The Walking Dead case. They say that because AMC owns both the studio that creates The Walking Dead and the channel that airs it, the two made a sweetheart deal.
Since AMC was paying itself for the show, the lawsuit alleged, AMC Studios had little incentive to negotiate a high licensing fee from AMC Network.
“So the accusation here is that in fact AMC yielded to temptation and was low-balling the licensing fee – the money that changes hand within the same corporate family,” Handel said.
As a result, the money passed along to the creators, they say, was much less than it might have been.
The lawsuit pointed to three other shows – Breaking Bad, Better Call Saul and Mad Men – that aired on AMC but were produced by outside studios. According to the lawsuit, the licensing fee was higher in all three instances, meaning the talent involved with it made a higher percentage of the shows’ net profits.
In the case of The Walking Dead, “There can be no question that if AMC Studios and AMC Network were not part of the same conglomerate, the story would be very different,” the lawsuit stated.
AMC dismissed the lawsuit as predictable whenever a programme is successful.