Asia Biz News - Asian Business News and Tenders
Genting Malaysia Sues Disney and Fox For $1B Over Backing Out on Theme Park Project
November 27, 2018
Casino operator Genting Malaysia Bhd just filed suit for over US $1 billion against Walt Disney Co. and Twenty-First Century Fox Inc. over a 2013 licensing agreement which would have helped create the first theme park featuring Fox’s television and movie properties.
Part of the massive Genting entertainment complex in Malaysia. Photo: Modh Fazlin Modh Effendy Ooi, CC
The lawsuit, filed in U.S. District Court in Los Angeles on November 26, alleges Fox itself had “seller’s remorse” in the deal ever since it was originally signed in 2013, and is now completely backing out of the deal.
The original plan had been for Genting Malaysia Bhd, a major casino operator in the area, to build what was to be known as Fox World. It would have been an addition to the company’s Resorts World Genting complex, located about an hour’s drive away from Kuala Lumpur. That contract first ran into trouble when Fox retroactively asked for a share of gate sales from the new theme park. Using a variety of legal maneuvers, it successfully stalled implementation of the licensing contract for years.
In parallel, the Walt Disney Company entered negotiations to buy Twentieth-Century Fox Inc. Those negotiations finally succeeded, with an agreement by Fox to let Disney purchase many of Fox’s assets effective early 2019, for US $71.3 billion.
According to Genting’s suit, Disney is now “calling the shots” for Fox. The suit alleges Disney forced Fox to completely back out of its licensing contract with Fox because the gaming enterprise connection wasn’t in sync with Disney’s “family-friendly” branding.
Under pressure from Disney, Fox issued what is called a “default notice” on its previous licensing arrangements with Genting. It was, per Genting, “entirely consistent with Disney wanting to kill the deal”.
According to the lawsuit, Genting had already invested over US $750 million towards Fox World before Fox pulled out of the contract. As the complaint says, “Given that FEG [Fox] had no right to terminate the Agreement, Fox and Disney are liable for what will exceed a billion dollars in damages attributable to the bad-faith behavior of both Fox and Disney.”
Genting seeks recovery of its investment in Fox World and punitive damages in the lawsuit.
Resorts World Genting is a major property. It houses Malaysia’s sole land-based casino, a total of seven hotels, shopping malls, performance arenas of various kinds, gondola lifts and many restaurants, bars and clubs. Over 23 million people visit the property each year.
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