Frank Darabont, creator of “The Walking Dead” television series, and Creative Artists Agency are suing AMC Networks Inc. over profit from the hit cable show.
Darabont, who developed the series with CAA and delivered it to AMC in 2010 and was forced off the show prior to the second season, said the company has deprived them of “tens of millions of dollars” in profit through improper and abusive “self-dealing."
In a complaint filed with the New York Supreme Court on Tuesday, the plaintiffs said that the company pays an artificially low licensing rate to the AMC affiliate that produced the show, keeping it running at a deficit while AMC benefits from the highly rated series.
“Darabont is being deprived of tens of millions of dollars in profits, despite delivering to AMC the most popular show on all of television and the most popular show in the history of cable,” the suit said.
Darabont and CAA said they are entitled to more than 20% of the profit from “The Walking Dead.”
Representatives for the plaintiffs also said Darabont had been wrongly fired from the series and is also entitled compensation and credit from the series’ offshoot “Talking Dead” and an upcoming spinoff.
AMC declined to comment.
“The Walking Dead” has trumped its cable competitors in ratings and is posting viewership numbers that challenge some of the highest-rated shows on broadcast television, along with NBC’s weekly prime time NFL package, “Sunday Night Football.”
According to the complaint, AMC set a license fee rate of $1.45 million per episode, with an increase of 5% per season, far less than what it costs to produce the show, meaning there is no profit to share with the creator and his agency.
That, the plaintiffs said, is lower than what AMC would pay to an outside studio, such as Lionsgate or Warner Bros. It also sets the rate for the full run of the show, whereas a typical deal with an independent studio would be for at least four years and then would be renegotiated.
“The Walking Dead” is currently in its fourth season and has been renewed for a fifth.
The court document said the show had accumulated a $49-million deficit as of September 2012, two years after the premiere. Before the creator and the agency could receive any money, the company would have to eliminate that shortfall.
Darabont wrote, directed and executive-produced the first episode and served as its show runner until he was forced out in 2011.
Creators and producers of shows such as “Smallville” and “Will & Grace” have previously sued “vertically integrated” companies -- those that make and air the shows in-house -- for allegedly cheating them out of profit.
What makes the “Walking Dead” case unusual is the ratings draw of the series on a cable network.
“This is a series with unparalleled success in cable, and it obliterates the distinction between cable and broadcast,” said Dale Kinsella, who is representing the plaintiffs.
AMC’s other original programs include “Mad Men,” produced by Lionsgate, and “Breaking Bad,” from Sony Pictures Television.
Shares of AMC have increased by nearly 25% to $63.22 in the last year.
Follow on Twitter: @rfaughnder