This week former showrunner and creator of The Walking Dead TV show on AMC, Frank Darabont, is suing AMC for contract breach and the loss of money he would have earned in profits because of the licensing deal he made with AMC. Read more below, the entire article is linked down below.

Do you think this will affect the show in a negative way? If Frank Darabont wins a big settlement or whatever, will AMC cut the budget or even stop the show? Let me know what you think in the comment section below.

The suit, filed Tuesday in New York state court and obtained by The Hollywood Reporter, hints that a standoff over Darabont’s profit participation, which has been brewing since February 2011, might in part explain his abrupt dismissal in July of that year, only weeks into production of Walking Dead’s second season and two days after he had appeared at Comic-Con to promote the show. AMC never explained the firing publicly or, according to the suit, to Darabont himself.

“AMC’s conduct toward Frank to date has been nothing short of atrocious,” Darbont’s lead lawyer Dale Kinsella tells THR. “Unfortunately, the fans of The Walking Dead have suffered as well by being deprived of his creative talent.”

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But court papers assert that Darabont and his agents at CAA, which also is a plaintiff in the suit, have not received even one dollar from his promised profit participation in the mega-hit series. The suit says that as of September 2012, two years after its premiere, AMC – which both produces and airs Walking Dead — claimed the show was running a deficit of $49 million. An alleged sweetheart deal between the network and its production arm “is clearly designed to ensure that [Darabont and CAA] never see that first dollar,” the complaint alleges.

Darabont’s lawsuit is the latest in a long line of so-called “vertical integration” cases in Hollywood that arise when the producer of a TV show also distributes it via an affiliated entity that pays a license fee to be shared with talent. License fees are supposed to be negotiated between producers and distributors to reflect the fair market value of a given series. But litigation brought by producers of hit series including Home Improvement, The X-Files, Will & Grace and Smallville have alleged artificial manipulation of license fees between “vertically integrated” companies to minimize or eliminate payments owed to talent. “This practice, known as ‘self-dealing,’ is at the heart of this dispute,” the Darabont lawsuit alleges.

According to the suit, AMC initially agreed contractually in September 2009 that the series would be produced by an unaffiliated studio such as Lionsgate or Warner Bros. Darabont would receive as much as 12.5 percent of that entity’s profit after standard industry deductions.

When Darabont delivered the script that was the basis for the first six-episode season, however, the suit alleges AMC decided to produce and broadcast the show in-house. Darabont’s representatives at CAA and the Jackoway Tyerman law firm agreed only “after gaining assurances from AMC that Darabont would obtain protections against improper self-dealing,” the suit alleges. Those protections included a commitment by AMC to “pay” its studio an “imputed” license fee comparable to what the show would get if it were made by an independent studio. Talent lawyers typically ask for such assurances.

Darabont repeatedly asked AMC to spell out the terms of his profit participation, the suit says, but the company waited to see how the show would perform. When it was clear that Walking Dead was a runaway hit, AMC then provided a proposal in February 2011 based on “an unconscionably low license fee formula” designed to ensure that the show would never be in profit, according to the suit. “AMC capped the license fee in perpetuity at the lower of 65 percent of the costs of producing the series or $1.45 million per episode, meaning that there would be a significant deficit on every episode produced for the life of the series.”

Put another way, “Because of AMC’s outrageous and improper formula, the profits pool in which [Darabont and CAA] participate may always be in deficit no matter how long-running and successful the series is,” the suit alleges.
Source: hollywoodreporter.com