So far, the story goes that David Lynch exited the "Twin Peaks" revival because, as he tweeted, "not enough money was offered to do the script the way I felt it needed to be done." Then the original cast members (though, notably not Kyle MacLachan) released a protest video of sorts, urging the network to do what it takes to bring Lynch back. But as always, there’s more to the story.
Variety reports that one of the key reasons for the breakdown between the network and Lynch was over the budget. When the final nine scripts by Lynch and Mark Frost were delivered, it became clear the cost of production was going to be higher than previously anticipated or agreed to. Showtime was reportedly fine with this, but asked that Lynch and Frost both take cuts in their profit sharing deals, as part of an overall plan to keep things on track financially. Then Lynch bailed, while notably, Frost remained (he has apparently been "taken by surprise" by Lynch’s comments).
So, where does this leave the show? Showtime are trying to work things out with Lynch, though with nine finished scripts, they don’t need to. However, his brand has pull, and no one seems to want to pull the trigger on the new season with the filmmaker who had planned to direct all nine episodes (it should be noted that during the run of the original series, he only directed six episodes across two seasons).
So it seems there’s still much more drama to unfold before this is resolved. So pour yourself a cup of good, hot, black coffee while you wait to see what happens next…