Disney, Genting Come to Terms on Theme Park

A legal wrangle between Genting Malaysia Bhd and Twentieth Century Fox—which became 21st Century Fox on its acquisition by the Walt Disney Co.—has been settled. That means a Genting theme park is finally a go at the company flagship near Kuala Lumpur, Genting Highlands (l.).

Disney, Genting Come to Terms on Theme Park

Genting Malaysia Bhd and Twentieth Century Fox have settled a $1 billion legal dispute that arose when Fox—which has joined the new millennium as 21st Century Fox—was acquired last year by the Walt Disney Co., a deal that closed in March.

Before the acquisition, Fox and Genting had a deal to use the movie giant’s brand on a Malaysian theme park attached to Genting’s Resorts World casino complex in Kuala Lumpur.

But the Disney Co., long outspoken in its opposition to casinos, came between the partners. Last week a restated memorandum of agreement gave Genting the use of certain Fox intellectual properties, which analysts called a positive move, according to the Malaysian Sun Daily.

With the resolution of the differences, PublicInvest Research has revised its visitor growth numbers on the plus side, after cutting it by 3 percent on news of the legal wrangle.

“We raise our FY20-FY21 earnings by 5-11 percent after factoring in higher visitor arrival of 5-6 percent,” the group said in a July 26 report. It added that the theme park will likely be renamed without the famous Fox brand.

“Nothing was disclosed on fee payment but the original agreement stated that Fox would only start receiving annual fees and royalties after the park opened,” PublicInvest said. “This was subsequently amended in 2014 and 2017, allowing Fox to receive payments immediately.”

Hong Leong Investment Bank Research is bullish on the development, as the new theme park will be the first in Asia using Fox’s intellectual property despite the new terms. “We believe excitement will return as this will still be the first theme park in Asia with Fox’s IP, and is likely to increase footprint,” HLIB said. “We note that the outdoor theme park is near completion and reckon it may be able to launch sometime in 2020.”

The research house has “penciled” in an estimate of 26.6 million visitors for fiscal 2020. “Holding all else constant, our sensitivity analysis shows that for every 10 percent increase in visitors (from our assumption), will increase EBITDA by about 6.5 percent and earnings by about 8 percent,” the group said.

Samuel Yin Shao Yang, an analyst at Maybank IB Research said the “incorporation of non-Fox intellectual property implies … that the outdoor theme park cannot reassume its previous name, 20th Century Fox World.”

Yin added that he outdoor theme park at Resorts World Genting, Malaysia’s only licensed casino complex, might open in the first quarter of 2020.

When the battle lines first were drawn, Genting Malaysia blamed “seller’s remorse” on behalf of Fox, because key parts of the latter brand were being taken over by Disney. The parties have now agreed to dismiss all claims and counterclaims. “Details are lacking at this point in time,” Yin said of the accord. “Nonetheless, we view this development positively. We gather all eyes will be on the second-quarter 2019 results conference call scheduled for 29 August 2019 for more details on this development.”