Fox, Disney Hit With $1.75 Billion Suit for Backing Away From Malaysian Theme Park

The complaint alleges that Disney didn't want to be associated with gambling.
Fox Consumer Products & Resort World Genting

In a new lawsuit, Genting Malaysia Berhad alleges spending $750 million to bring to life a theme park just outside of Kuala Lumpur, Malaysia, that would leverage Fox intellectual property including Ice Age and Planet of the Apes, only to have Fox and Disney walk away from the deal with "seller's remorse."

According to a complaint filed Monday in California federal court, Genting Malaysia Berhad (GENB) signed its licensing deal with Fox in 2013. The plaintiff notes that unlike Disney or Universal, Fox had no experience in the theme park business until GENM came forward with an opportunity to create the world's first Fox-branded theme park called "Fox World."  The deal was to provide Fox an annual license fee and a cut of retail sales, with Fox also receiving various approval rights over the design of the park, which would be the centerpiece to a resort complex that included a casino.

GENM says that a "soft opening" was set to occur in the first half of 2019, but that lately, Fox has been throwing up roadblocks including insisting upon "less qualified" vendors, failing to provide style guides for digital assets and failing to provide required on-site support.

"Why would [Fox Entertainment Group] behave this way?" asks the complaint rhetorically. "Initially, because FEG wanted to use its leverage under the [Memorandum of Agreement] to threaten termination and force a renegotiation of the economic terms of what it viewed as a below-market deal, largely due to its failure to negotiate for a share of gate sales."

GENM says that Fox was successful in extracting some concessions including increased and accelerated license fees and minimum guarantee payments, but the problems didn't abate — especially when Disney came into the fold upon a deal to acquire Fox assets from Rupert Murdoch.

"On information and belief, Fox’s soon-to-be owner Disney was now calling the shots, and its objective was no longer renegotiation of the MOA, but termination," states the complaint. "Unlike Fox, which was perfectly happy to have the Park situated a stone’s throw from the casinos of Resorts World Genting so long as it could continue to extract financial concessions from GENM, Disney wanted no association with a gaming company like GENM due to Disney’s 'family-friendly' brand strategy, as evidenced by its well-documented history of lobbying against the opening of gaming facilities near its parks. Accordingly, FEG issued a 'notice of default' purporting to start the process of terminating the parties’ Agreement."

The plaintiff, represented by a Kasowitz Benson team led by John Berlinski, says that seller's remorse "is not a valid ground for terminating an agreement" and is now seeking to recoup the $750 million investment, plus it is demanding more than $1 billion in consequential and punitive damages.

GENM is asserting breach of contract and breach of fair dealing against Fox, while also going after Disney for allegedly inducing the breaches. Additionally, the validity of the termination is at issue.

The lawsuit also details some Murdoch intrigue post-merger.

James Murdoch, for instance, is said to have "disapproved of the business fundamentals of Fox World, with Mr. Murdoch commenting to others within Fox that he preferred to invest in and operate Fox-owned parks rather than license Fox IP to third-party theme park owners. Moreover, allowing an entity such as GENM, over which 21CF would have no control, to own and operate a theme park called 'Fox World' would have been inconsistent with 21CF’s business plans to rebrand the company using the name 'FOX' after the merger."

A spokesperson for 20th Century Fox Film commented, "This lawsuit is entirely without merit. As the complaint itself makes clear, Genting has been failing to meet the agreed-on deadlines for several years, long before the 21CF-Disney agreement. The allegation that Disney, rather than Fox, finally decided to declare a default is simply made up. We look forward to presenting all the facts in the appropriate forum.”

"The claims made against Disney in this matter are utterly without merit," added a Disney spokesperson.