So how do these fees work, and why are at the center of a potential $1 billion lawsuit?
The Undead Dispute
If you listen to AMC, these kinds of lawsuits are like a pack of zombies, forever emerging from the darkened periphery. "These kinds of lawsuits are fairly common in entertainment and they all have one thing in common -- they follow success," the network told the Washington Post. "Virtually every studio that has had a successful show has been the target of litigation like this, and 'The Walking Dead' has been the #1 show on television for five years in a row, so this is no surprise."
While it's true that lawsuits often follow the money, where that money is and the way it changed hands in this case is actually a fairly new phenomenon. While networks used to pay a licensee fee to studios to air their shows, recent regulatory changes have allowed networks to own their own studios, allowing the payment of licensing fees to essentially be "changing pockets in the same pair of pants," as the lawsuit put it. And since the talent -- writers, actors, producers, etc. -- are paid based on the licensing fee, AMC Studios giving AMC Network a sweetheart deal on licensing fees means less money for the talent.
"The defendant AMC Entities exploited their vertically integrated corporate structure to combine both the production and the exhibition of TWD," the lawsuit claims, "which allowed AMC to keep the lion's share of the series' enormous profits for itself and not share it with the Plaintiffs, as required by their contracts."
Given that networked-owned studios (or studio-owned networks) are on the rise, expect even more licensing fee lawsuits. Even if this one is settled out of court, it could have enormous ramifications not just for The Walking Dead's financial and creative talent, but for those involved in other shows as well.