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Robert Kirkman & AMC's Walking Dead Lawsuit, Explained

SO WHAT IS THE LICENSE FEE FOR THE WALKING DEAD?

Here lies the main cause of contention. AMC technically pays no license fee because they produce the show themselves, so there is no need to pay themselves a license fee to air the show. However, in instances like this, the contracts all state (except for Kirkman's, who actually signed his before AMC even had this contract language in their deals) that they will use an "imputed license fee." That means that they will pretend that AMC Studios (who produce the show) gets paid a license fee from AMC Network, and AMC Studios will pay everyone out of that money.

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This is actually fairly common in the industry, but Kirkman and the other plaintiffs (which include producers Gale Anne Hurd and David Alpert and former showrunner Glen Mazzara) claim that the imputed fee is far too low. It used to be roughly $1.4 million an episode and is now at $2.4 million. That figure is far lower, though, than what AMC pays SONY Television for Better Call Saul, which is far less popular than The Walking Dead. So that's the biggest bone of contention right there. They believe that AMC is undercharging AMC Studios in an attempt to then pay all the people they owe (including all of the plaintiffs in this suit and Darabont in his suit) what is rightfully owed them, despite contract clauses that claim that the imputed license fee will be a fair market value. (In Darabont's lawsuit, his lawyers allege that a fair market value for an imputed license fee for The Walking Dead would be $30 million.)

DOES VERTICAL INTEGRATION AFFECT OTHER AREAS, AS WELL?

Yes, because AMC Studios deals solely with AMC for everything else, that means it turns down deals with other possible sources of revenue. For instance, an unnamed corporation made a substantial offer to AMC when Fear the Walking Dead (the spin-off that is also part of this lawsuit, as is the talk show Talking Dead) for the international rights to the show, but AMC wanted those rights for themselves to better position themselves for the international market. Similarly, AMC owns all of the streaming rights to the Dead shows, and while they could have sold them off (and shared the profits from those sales with the plaintiffs) they have decided to keep them for themselves as part of the plan to make AMC a player in the streaming service game, much like CBS All Access. (AMC launched a $5 monthly streaming subscription service back in June 2017.)

RELATED: Former Walking Dead Showrunner Darabont Seeks $280 Million from Lawsuit

ARE THEY ONLY DISPUTING THE LICENSE FEE?

No, they are generally taking issue with AMC's accounting period. There is a famous term called "Hollywood Accounting," where Hollywood can manage to hide profits and turn hit shows and movies into technical failures by using profits from one project to pay for costs of another project. This is made a lot easier when you are dealing with vertical integration, because it is all one company, so it is very easy to theoretically hide money here or there. For instance, AMC received $22.8 million from Apple’s iTunes licensing of The Walking Dead but only reported $4.6 million as "profit" to be paid out to the profit participants like the plaintiffs. There are many other claims like that in the complaint. In a lot of ways, this is an "audit" lawsuit, meaning that it is mostly trying to get AMC to prove its accounting is legit and if it cannot, then pay those monies to the plaintiffs.

HOW MUCH MONEY ARE WE TALKING, HERE?

The plaintiffs have not made a specific claim for money as of yet. However, if Darabont believes that his lawsuit is worth $280 million, it would stand to reason that the lawsuit of Kirkman, Hurd, Mazzara and Alpert would be roughly four times Darabont's lawsuit, so we would be talking roughly a billion dollars.

WHAT HAPPENS NEXT?

AMC would have to file a legal response to the lawsuit. They did make a public statement about the claim, stating, "These kinds of lawsuits are fairly common in entertainment and they all have one thing in common — they follow success. Virtually every studio that has had a successful show has been the target of litigation like this, and The Walking Dead has been the No. 1 show on television for five years in a row, so this is no surprise. We have enormous respect and appreciation for these plaintiffs, and we will continue to work with them as partners, even as we vigorously defend against this baseless and predictably opportunistic lawsuit." Presumably AMC will fight this claim just as hard as it's fought Darabont's lawsuit.

Forgetting just the specific money value of this lawsuit, this could mean a major statement for the future of how license fees are worked out for vertically integrated corporations. Since so many more of these companies are integrating, that could be extremely important for the future of television production.

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