Fox has agreed to acquire the pioneering streaming platform Roku in a deal valued at around $22 billion US, including debt. This acquisition will provide Fox with access to over 100 million households globally, as well as the Roku channel and its valuable first-party data. Fox, known for its extensive sports, news, and entertainment network, including Tubi which it purchased in 2020, will benefit from this strategic move.
Roku’s founder, Anthony Wood, previously involved with Netflix during its transition from DVD rentals to streaming in the early 2000s, initiated the company’s journey. After being spun off from Netflix, Roku introduced its first set-top box in 2008. Wood, currently serving as Roku’s chairman and CEO, was inspired by his passion for recording and watching the classic show “Star Trek.”
Being one of the early adopters of streaming services on television through connected devices and smart TVs, Roku primarily generates revenue from advertising and subscriptions to streaming apps on its platform. The company also operates the popular Roku Channel, providing free content to users.
With advertising being its main revenue driver, Roku reported $613 million in revenue for the first quarter, a 27% increase year-over-year. The partnership between Fox and Roku positions the combined entity as the third-largest player in the U.S. television market in terms of viewership share.
Fox’s CEO, Lachlan Murdoch, expressed enthusiasm about merging Fox’s live news and sports content with Roku’s extensive streaming platform, enhancing advertising and subscription opportunities for Fox. Roku’s Wood also emphasized the potential to accelerate innovation and scale faster with Fox’s support.
Analyst Paolo Pescatore from PP Foresight highlighted the significance of Fox acquiring Roku in the ad-supported streaming sector, emphasizing the benefits of combining premium content, live sports, advertising, and platform distribution under one roof.
Under the agreement, Roku investors will receive $96 US in cash and approximately 0.97 Fox Class A shares for each Roku share held, equating to $160 US per share. After the deal closes, current Fox shareholders are anticipated to own about 73% of the merged company, with Roku shareholders holding approximately 27%.
The transaction is slated to be finalized in the first half of the upcoming year, pending approval from both Fox and Roku shareholders, as well as regulatory clearance. While Fox’s stock experienced a slight decline prior to the market opening, Roku’s shares saw a modest increase.
