Yesterday, YouTube revealed it had successfully poached longtime Disney exec Justin Connolly, and has set him up to manage its relationships with major media companies and run its burgeoning live sports division.
Then, just hours later, Disney filed a lawsuit against YouTube, asking the Los Angeles Superior Court for an injunction to stop Connolly’s appointment. Its reasoning? Connolly–which has been with Disney since 2003, mostly as part of sports-focused ESPN–signed a new, three-year employment contract last November. That contract comes with a one-time right to terminate in March 2027. And, since it’s not March 2027, Connolly is legally obligated to continue working for Disney for almost two more years, the Mouse House claims.
But there’s more to this story. Connolly, who most recently was President of Disney Platform Distribution, has been leading negotiations for Disney to renew its content distribution deal with YouTube.
Disney’s suit accuses YouTube of tortious interference with contractual relations, saying it induced Connolly to break his employment agreement, as well as unfair competition. It alleges Connolly could leak trade secrets and confidential information to YouTube that could affect the still-in-progress renewal negotiations.
“Connolly has intimate knowledge of Disney’s other distribution deals, the financial details concerning Disney’s content being licensed to YouTube, and Disney’s negotiation strategies, both in general and in particular with respect to YouTube,” the suit claims. “It would be extremely prejudicial to Disney for Connolly to breach the contract which he negotiated just a few months ago and switch teams when Disney is working on a new licensing deal with the company that is trying to poach him.”
Connolly apparently notified Disney of his resignation last week, and did not respond when asked if he planned to work for YouTube. He’s exiting as Disney is in the midst of rolling out its new ESPN streaming service.
We can’t know how Connolly’s hiring will affect the Disney x YouTube negotiations, but one thing’s clear from this suit: Disney considers YouTube a serious competitor. Yes, they’re working together for content distribution, but YouTube is the #1 streaming service in the U.S., far outstripping Disney+, and it’s also shaping up to be a force in live sports after clinching the NFL Sunday Ticket rights. Considering Disney owns ESPN and is also pursuing live sports deals for Disney+ (it just signed a five-year deal with the Women’s Champions League), Disney likely views veteran Connolly as an invaluable asset it really doesn’t want a big competitor to get hold of.
Will this pan out for Disney? Maybe. Fox filed a similar suit against Netflix in 2016, and the court ruled in Fox’s favor.
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