Fox has agreed to acquire streaming pioneer Roku in a cash and stock transaction worth around $22 billion US, inclusive of debt. This acquisition will grant Fox entry to over 100 million global households, including the Roku channel and its first-party data. Fox, known for its extensive sports, news, and entertainment network, as well as Tubi, acquired in 2020.
Roku’s founder, Anthony Wood, was previously associated with Netflix in the early 2000s during the transition from DVD rentals to video streaming. After being spun off by Netflix, Roku introduced its first set-top box in 2008. Wood, currently serving as Roku’s chairman and CEO, was inspired to pursue this technology by his passion for recording and watching his favorite show, “Star Trek.”
Being one of the early pioneers bringing streaming platforms like Netflix and YouTube to television through connected devices and smart TVs, Roku primarily generates revenue from advertising and subscriptions to streaming apps on its platform. Additionally, Roku operates the ad-supported Roku Channel.
Advertising is Roku’s primary revenue stream, amounting to $613 million in the first quarter, marking a 27% increase year-on-year. Both companies announced that Roku will continue operating as an open and partner-friendly platform. Together, Fox and Roku anticipate becoming the third-largest player in U.S. television viewership share.
Fox’s CEO, Lachlan Murdoch, highlighted the strategic alignment of Fox’s live news and sports content with Roku’s large streaming viewership. This partnership is expected to enhance Fox’s exposure to advertising and streaming subscriptions. Wood expressed enthusiasm for accelerating their vision through the partnership with Fox.
As part of the deal, Roku investors will receive $96 US in cash and approximately 0.97 Fox Class A shares per share held, valuing the offer at $160 US per share. Following the transaction’s closure, Wood will retain an active role within the company and join the Fox board of directors.
Analyst Paolo Pescatore from PP Foresight emphasized the significance of Fox’s acquisition of Roku in the ad-supported streaming sector. He noted that this move provides Fox with more influence over discovery, data, and monetization amid the ongoing shift in TV viewing habits.
Upon completion of the transaction, existing Fox shareholders are projected to own roughly 73% of the combined entity, with Roku shareholders holding about 27%. The deal is slated to close in the first half of the upcoming year, pending approval from both Fox and Roku shareholders, as well as regulatory clearance. In pre-market trading, Fox’s stock experienced a decline, while Roku’s shares saw a slight increase.
