11:06am PT by Eriq Gardner
'Walking Dead' Trial Won't Focus on "Fair Market Value" of Hit Series
With a few weeks to go until the possible beginning of one of Hollywood's biggest ever trials, AMC has scored a small victory. On Wednesday, in the $280 million profits lawsuit that Frank Darabont and CAA brought over The Walking Dead, a New York judge ruled that plaintiffs' experts can't offer an assessment of the "fair market value" of the hit zombie series.
The lawsuit contends that Darabont and CAA have been cheated with regards to what AMC Network pays to license Walking Dead from sister company AMC Film Holdings. The plaintiffs allege having self dealing protection in contracts, such that when a transaction is made with an affiliate, the imputed license fee must reflect the kind of arms length negotiation that AMC would make with third party producers like Sony (Breaking Bad) or Lionsgate (Mad Men).
The plaintiffs had experts prepared to talk about how Walking Dead was integral to AMC's success and had ratings comparable to NFL primetime games. The experts' reports basically posited that if Walking Dead was on the open market, the show would command nearly $30 million an episode.
But New York Supreme Court Justice Joel Cohen agrees with AMC that the reference point for compliance with contracts is AMC's deals, not the marketplace. In other words, forget what networks pay for NFL primetime games or what NBC once paid for a hit show like E.R. That's irrelevant. The judge also ruled that AMC's total revenue is also inadmissible and that compensation for AMC executives is prejudicial.
This doesn't necessarily doom plaintiffs' damage theory as they can still point to the $2 million or $3 million per episode paid for shows like Breaking Bad and Mad Men and argue that Walking Dead was entitled to a lot more given its superior performance among audiences. Nevertheless, it does leave plaintiffs without one avenue in the trial.
The judge's pre-trial evidentiary rulings weren't completely a loss for Darabont. In particular, defendants won't be able to introduce the inflammatory and profane emails that got the co-creator fired from the show in the midst of the second season. AMC's deal with Steven Spielberg's company, which the network wanted to present as evidence of its good faith in bargaining, has also been deemed out-of-bounds in a small win for plaintiffs.
At the moment, the trial is on for April. However, thanks to COVID, New York will only be resuming live jury proceedings later this month, and it's unclear whether the state can accommodate the type of month-long legal spectacle that the Walking Dead trial will be. Clarity on the timing of this trial should be coming next — perhaps in the coming week.
Naturally, today's development prompted both sides to stake the higher ground.
"We are pleased with today’s rulings, which pave the way for us to prove at trial that AMC paid the plaintiffs everything they are owed under the contract," said Orin Snyder, representing AMC. "Last summer, following a trial, a California court ruled in AMC's favor on similar claims brought by Robert Kirkman. We look forward to presenting our case to a jury and achieving the same result here."
"We are pleased with the results on the motions in limine, and Plaintiffs are ready to prove their claims at trial," said Dale Kinsella, counsel for plaintiffs. "As expected, Darabont’s emails, which AMC has tried to highlight in every motion for seven years, were excluded from trial because they have nothing to do with the substantive issues in this matter. Now we can get back to the matter at hand, which is compensating the creators for what they rightly deserve."