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Frank Darabont says AMC is refusing to share production cost records in his profit participation lawsuit over The Walking Dead.
Darabont sued the network in 2013, claiming he was shorted millions in profits from the hit series by the cable channel making a sweetheart deal licensing the show to itself in breach of his contract. Both parties filed motions for summary judgment last year and are awaiting a decision from Judge Eileen Bransten, and now Darabont is giving her another issue to consider: whether AMC is obligated to turn over additional accounting records.
“During the audit, Plaintiffs’ auditor asked to review Defendants’ production cost reports, production cost budgets, and production cost ‘bibles’ (ledgers),” attorney Jerry Bernstein writes in a Monday letter to Bransten. “Plaintiffs’ auditor needed these documents to verify the accuracy of the ‘Cost of Production’ stated on Plaintiffs’ participation statements, which is the largest expense deducted from Plaintiffs’ Gross Receipts.”
Bernstein claims AMC refused to provide the documents, arguing that the production cost reports and budgets are irrelevant and Darabont’s audit rights are limited to the portions of the network’s books related to distribution.
“Defendants’ apparent position — that the ‘Cost of Production’ of The Walking Dead is unrelated to the ‘distribution’ of The Walking Dead — is unheard of in the television industry,” argues Bernstein. “AMC Studios cannot ‘distribute’ The Walking Dead without first incurring expenses to produce The Walking Dead — i.e., the “Cost of Production.” The Cost of Production is by far the largest expense on Plaintiffs’ participation statements. If Plaintiffs cannot verify AMC Studios’ calculation of the Cost of Production, Defendants can artificially inflate the Cost of Production with impunity, thereby reducing the profits for Darabont and CAA to share in.”
Darabont in August agreed to pause claims related to Walking Dead graphic novel creator Robert Kirkman’s contract. Kirkman and other stakeholders in the series filed their own suit against AMC last fall. Darabont also wants to see their audit reports.
AMC attorney Orin Snyder on Tuesday sent The Hollywood Reporter a statement in response to the letter. “This is a routine and minor discovery issue in the second lawsuit dealing with audit claims and an overreach by plaintiffs seeking documents to which they aren’t entitled,” says Snyder. “We look forward to the court’s assistance in resolving it.”
Oct. 23 7:20 a.m. Updated with a statement from AMC.
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