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Mexico's Santos Laguna sue Disney over broadcast rights

Stock MarketsDec 30, 2020 10:45PM ET
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© Reuters. FILE PHOTO: A screen shows the trading info for The Walt Disney Company company on the floor of the NYSE in New York

MEXICO CITY (Reuters) - Mexican soccer club Santos Laguna are suing U.S.-based global entertainment giant Walt Disney Company (NYSE:DIS), alleging millions of dollars in damages due to contractual violations stemming from Disney's acquisition of Twenty-First Century Fox last year.

The club filed suit in a California court this week, claiming Disney violated the terms of a five-year agreement signed in 2017 that set out lucrative broadcast rights for their home games, plus other promotional services.

They argue the violations could leave the club without a viable broadcast partner to televise their games.

Santos Laguna assert the original deal they signed with what was then known as FSLA Holdings, formerly a unit of Fox, was worth some $106 million, covering broadcast rights of games both in Mexico and internationally beginning in the 2019/2020 season.

But after Disney's $71 billion acquisition of Fox, Disney agreed to divest itself from FSLA, now known as TFCF Holdings.

The lawsuit alleges that in a related deal with Mexican regulators, Disney agreed that sports broadcaster ESPN, which is majority owned by Disney, would not try to buy up its competitor to ease regulatory approval for the acquisition in Mexico.

In Mexico, ESPN and Fox Sports channels are the two major broadcasters for professional soccer games.

"We believe the claims are utterly without merit and will defend against them vigorously," a Disney spokesman said.

With the future of TFCF in limbo, Santos say they will likely be denied license fees and other promotional considerations that they believe they are entitled to under the original contract.

That required FSLA to pay Santos at least $72.5 million for the right to broadcast home games, plus a marketing and promotion plan worth $33 million, the lawsuit said.

Santos Laguna are based in the northern city of Torreon.

Mexico's Santos Laguna sue Disney over broadcast rights
 

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