Marketing

Toggle

Article

Genting sues Fox and Disney for US$1bn over theme park

Genting Malaysia has sued Twenty-First Century Fox and The Walt Disney Company for over US$1 billion for abandoning the contract signed in 2013 to construct the world’s first Fox-branded theme park named Fox World. According to the court document seen by A+M, the US$1 billion comprise the approximately US$750 million Genting had invested in the park, as well as consequential and punitive damages.

In the court document, Genting alleged that both parties faced “seller’s remorse”, and that Fox has “improperly conspired” with Disney to “sabotage” the Fox World project. The court document alleged that Fox created years of delays to threaten termination and force a renegotiation of the economic terms of what it viewed as a below-market deal. This was mainly a result of its failure to negotiate for a share of gate sales when it entered into the agreement with Genting.

The court document alleged that Fox never invested its own money in the theme park project. Rather, Genting has always been the “sole owner, financier and risk-taker” regarding the park’s future success. To date, Genting has spent approximately US$750 million of expenses, although the agreement required it to spend only US$140 million.

“Having made such a significant investment in Fox World, Genting has worked feverishly since 2013 to bring it to life as soon as possible and to recoup its investment. Fox, however, has fought Genting at every turn, causing delay after delay,” the court document stated. Some examples included Fox’s “early insistence” that Genting replace one of its preferred vendors with Fox’s vendor, which was eventually terminated from the project due to “inexperience and unethical business practices”. Fox also failed to provide Genting with industry standard style guides and digital assets for many of its licensed properties, including its very own 20th Century Fox logo.

Under the agreement, Genting is allowed to license select Fox IP for use in the construction of Fox World to help Fox compete with the likes of Disney and Universal, as well as make the new theme park the centerpiece of Resorts World Genting. It also paid Fox annual license fees and royalties on certain revenue streams such as retail and F&B.

Meanwhile, Genting said Disney wanted to end the contract as it did not want to be associated with a gaming company such as Genting due to its “family-friendly” brand strategy. The court document alleged that Disney directed Fox to issue a “notice of default” starting the process of terminating the agreement. “The timing of this notice of default is highly suspect and entirely consistent with Disney wanting to kill the deal for its own benefit,” the document read, adding that Fox waited until Genting had spent at least US$50 million more on the construction of Fox World, with many of its marquee attractions already nearing completion, before issuing the notice of default.

Genting also alleged that Fox waited until its acquisition by Disney had not only been approved by their boards, but was “so far along in the process” that decisions had already been made about the key executives who would stay or leave. “With many of the key executives at Fox involved in negotiating the agreement no longer with the company for other reasons, there were already few people left to defend the decision to pursue the Fox World project,” the document said.

It added, “Disney’s theme park group is far larger than Fox’s with far more clout. There is little doubt which group’s executives will be in charge after the merger and what their view of Fox World would be, given their desire to protect Disney’s theme parks from competition in the increasingly competitive Asian market, and to protect Disney’s “family-friendly” image from any association with Genting’s gaming operations.”

A+M has reached out to Fox and Disney for comment.

(Read also: The bidding wars: Comcast challenges Disney in a fight for FOX)

Read More News

Trending