Walt Disney Co and Twenty-First Century Fox Inc are being sued for more than US$1 billion by casino operator Genting Malaysia Bhd, which accused them of abandoning a contract related to its planned construction of the first Fox-branded theme park.
Genting said "seller's remorse" induced Fox, with Disney's help, to breach its 2013 contract with Fox Entertainment Group (FEG) to license intellectual property for Fox World, a proposed addition to its Resorts World Genting complex, an hour's drive from Kuala Lumpur.
Disney did not immediately respond to requests for comment. Dan Berger, a spokesman for Twentieth Century Fox Film, one of the defendants, declined to comment.
The lawsuit was filed in the US District Court in Los Angeles as Disney prepares to complete its US$71.3 billion purchase of many Fox assets, expected in the first quarter of 2019.
Genting said the problems began as Fox engineered years of delays to force a renegotiation of the contract, which did not give it a share of gate sales.
But according to the complaint, Disney is now "calling the shots," and wants to end the contract because associating with a gaming company didn't fit its "family-friendly" brand strategy.
Genting said Fox issued a default notice with the hope of terminating the contract, in a manner "entirely consistent with Disney wanting to kill the deal" to benefit itself.
"Given that FEG (Fox Entertainment Group) 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 behaviour of both Fox and Disney," the complaint said.
Genting said it had already made a "$750 million-plus investment" in Fox World. It is also seeking punitive damages.
According to the complaint, Resorts World Genting contains Malaysia's only legal land-based casino, seven hotels, shopping malls, performance venues, gondola lifts and scores of restaurants, bars and clubs. More than 23 million people visit each year, the complaint said.
The case is Genting Malaysia Bhd v Fox Entertainment Group LLC et al, U.S. District Court, Central District of California, No. 18-09866.
Meanwhile, Genting Malaysia Bhd emerged as the top active counter on Bursa Malaysia today following its legal suit against Walt Disney Co (Disney) and 21st Century Fox Inc (Fox) in Los Angeles.
At 9.35 am, its share price eased 42 sen to RM3.18, after opening 60 sen lower at RM3.00 today.
This also caused Genting Malaysia's parent company, Genting Bhd’s share price to decline 35 sen to RM6.55 at 10.02 am, after opening 50 sen lower at RM6.40. Shares fell to a low of 2.93 ringgit before paring some losses to trade down 13 percent. The broader Kuala Lumpur index was trading down 0.7 percent.
It was reported that Genting Malaysia is conducting the legal suit towards Fox and Disney for pulling out of an agreement to sponsor a Fox World theme park outside Kuala Lumpur.
Genting Malaysia is seeking over US$1 billion in damages, claiming Disney does not want to be associated with its gambling business as the Hollywood giant moves to finalise its acquisition of 21st Century Fox’s entertainment assets.
It is believed that Genting Malaysia had invested US$750 million in the park, which was due to open by 2020.
In 2013, Fox entered into a licencing agreement with Genting Malaysia to develop the first Fox-branded theme park in the world.
Unlike Disney, which owns its parks in part or in whole, Genting Malaysia would own and finance the park completely, with Fox getting a cut of the revenue from retail, food and beverages.
– Agencies
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