Disney Sued by Mexico Soccer Club Alleging Contract Breach

Santos Laguna, a soccer club in northern Mexico, is taking on a giant in a lawsuit against Walt Disney Co, alleging breach of contract in a complaint filed in Los Angeles.

Santos says that Disney leaves the soccer club with few options to televise its games in Mexico after the entertainment company decided to divest broadcasting assets to acquire 21st Century Fox.

Disney agreed to divest or liquidate the Mexican assets of Fox subsidiary FSLA Holdings -- which includes Santos’s broadcasting rights -- in order to prevent local regulators from blocking the Fox purchase, according to the complaint. The local channels are now managed separately from Disney, as required by Mexican regulators.

“We believe the claims are utterly without merit and will defend against them vigorously,” a Disney spokesperson said.

The club alleges it’s facing the prospect of losing its contract altogether, or having it purchased in a “fire sale” to a company that wouldn’t provide equivalent audience access. The other major international sports network in Mexico that Santos considers comparable, ESPN, is owned by Disney and agreed with regulators not to buy Mexican assets offloaded by the entertainment company, according to the complaint.

“There were no other major international sports networks in Mexico beyond ESPN and FSLA, and therefore there were no equivalent third parties who could take over FSLA’s agreements,” the club said in its complaint, which lists FSLA, now known as TFCF Holdings, as a defendant.

Santos says that Disney, FSLA and Mexico’s telecom regulator continue to shut the club out of the divestment process, and says that its contract with FSLA specifically prohibits such a divestment.

The complaint was filed on Wednesday in Los Angeles county’s Superior Court. Santos is seeking recompense for its damages and declarations of its rights.

©2020 Bloomberg L.P.

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