EXCLUSIVE, UPDATED WITH CAA’s RESPONSE: Three years into AMC’s legal battle with CAA and client Frank Darabont over profits from mega hit The Walking Dead, the cable network is making an unprecedented move that affects a talent agency’s most lucrative revenue stream: package fees.
I hear AMC parent AMC Networks sent a letter to CAA today informing the agency that the company no longer will pay packaging fees on new projects involving CAA clients. The new policy is being implemented effective immediately across all AMC networks — flagship AMC as well as IFC, WE tv and BBC America. It will apply only to new shows taken to those nets from now on, with AMC Networks honoring the package fees on all projects that already have been set up. The move affects only CAA shows — I hear AMC Networks is not taking on the package fee practice and will continue business as usual with the other agencies, agreeing to package fees on pitch sales by their clients.
When reached by Deadline, a spokesman for AMC confirmed the new package fee policy but would not comment further.
The salvo is believed to be in retaliation to CAA’s continuous involvement in Darabont’s lawsuit against AMC. In an unusual move, the top agency joined its client in 2013 when they jointly filed a lawsuit against AMC for additional profits from the blockbuster zombie drama, which Darabont had developed and executive produced/run for a season and a half until he was dismissed midway through Season 2.
Tensions between the network and the agency reportedly had been rising over the past three years as CAA persisted in its legal action against AMC through the initial phase and the discovery stage. In a September filing, CAA and Darabont declared that they will be seeking a whopping damages verdict of more than $280 million from AMC.
Package fees have become a somewhat controversial subject in Hollywood. Once awarded to agencies for putting together complex TV packages, they now have become automatic fees agencies collect from networks when their clients sell a project. Those packaging fees have become a windfall for the agencies, who sometime get paid faster and earn more than their clients who do the show, so AMC Networks’ move is certain to reverberate around town. It also will create a dilemma: Will CAA let its clients pitch series to AMC nets if it is not going to get packaging fees?
In a statement to Deadline, Chad R. Fitzgerald, one of the leading attorneys on the team representing CAA and Darabont in their lawsuit against AMC, slammed the new network policy while insisting that the agency will put their clients first.
“This is merely AMC litigating by other means,” Fitzgerald said. “AMC obviously remains unhappy that Frank Darabont and CAA have not given an inch, are still aggressively pursuing their meritorious claims against AMC regarding profits on The Walking Dead and other causes of action in the litigation, and have seen consistent success before the Court to date. Mr. Darabont and CAA look forward to vindicating their rights at trial. In the meanwhile, CAA will always do what is in the best interests of its clients.”
Following the September end of discovery in the legal dispute between Darabont/CAA and AMC, the two sides prepared their summary judgment motions, each side likely sticking to their previous claims. (AMC repeatedly has called Darabont and CAA’s claims of hundreds of millions of dollars in owned profits “baseless.”)
The judge on the case, Justice Eileen Bransten, is expected to review the filings early next year. If the case goes to trial, Bransten had warned that it won’t start until 2018 at the earliest as she is booked for 2017.