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Netflix, Fox in Legal Row Over 'Valuable Employee' Poaching

Zacks Equity Research
Updated

Netflix, Inc. NFLX has been recently entangled in a legal battle with Twenty-First Century Fox, Inc. FOX. The latter alleged that Netflix has been illegally poaching the best executives of the company, including those that had fixed-term employment agreements with the company.

Per media reports, Fox has filed a lawsuit against Netflix saying the streaming giant has been on a “brazen campaign to unlawfully target, recruit, and poach valuable Fox executives by illegally inducing them to break their employment contracts with Fox to work at Netflix.” The exact employee contract specification against which the lawsuit has been filed is not clear yet.

According to a report from Deadline, Netflix is gearing up to defend itself and commented “We do not believe Fox’s use of fixed term employment contracts in this manner are enforceable. We believe in employee mobility and will fight for the right to hire great colleagues no matter where they work.”

Media reports indicate that the lawsuit was particularly targeted at two former Fox employees, Marco Waltenberg and Tara Flynn who currently hold key positions (promotions and drama programming leads) at Netflix.

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An excerpt from the lawsuit that was filed states “This action is necessary to enforce Fox’s rights, to hold Netflix liable for its wrongful conduct, and to prevent Netflix from continuing such illegal conduct.”

Netflix has been rapidly expanding its operations and offerings, which have naturally resulted in a rapid hiring spree. However, such lawsuits do not bode well for the company, especially as it is already investing heavily in expanding both original and acquired content for its platform. Also, stiff competition from the likes of Alphabet’s Google GOOGL, Amazon AMZN, Hulu and others remains an overhang.

NETFLIX INC Price and Consensus

NETFLIX INC Price and Consensus | NETFLIX INC Quote

Currently, Netflix carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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