Fox has reached an agreement to acquire Roku, a leading streaming platform, in a deal valued at around $22 billion, including debt. This acquisition will grant Fox access to over 100 million households worldwide, including the Roku channel and its valuable first-party data. Fox, known for its extensive sports, news, and entertainment network, as well as its acquisition of Tubi in 2020, sees this move as a strategic advancement.
Roku’s founder, Anthony Wood, previously associated with Netflix during the early 2000s as the company transitioned from DVD rentals to video streaming. Following a spin-off from Netflix, Roku introduced its first set-top box in 2008. Wood, now chairman and CEO of Roku, was inspired by his love for the show “Star Trek” in his pursuit of developing streaming technology.
As a pioneer in bringing streaming services like Netflix and YouTube to television through connected devices and smart TVs, Roku primarily generates revenue through advertising and subscriptions from streaming apps on its platform. The company also operates the popular Roku Channel, offering free-to-watch content.
With advertising being its main revenue source, Roku reported a revenue of $613 million in the first quarter, marking a 27% year-on-year increase. The collaboration between Fox and Roku is set to solidify the combined entity as the third-largest player in U.S. television viewership share.
Lachlan Murdoch, CEO of Fox, emphasized the alignment of live news and sports content with a high-viewership streaming platform resulting from the merger. Wood expressed his excitement about the partnership, highlighting the potential for accelerated growth and innovation for viewers, partners, and advertisers.
Upon completion of the deal, Wood will retain a role within the company and join the Fox board of directors. Industry analyst Paolo Pescatore noted that the acquisition provides Fox with a stronger presence in the ad-supported streaming sector, enhancing control over content discovery, data utilization, and monetization strategies amid evolving TV viewing trends.
Under the terms of the agreement, Roku investors will receive $96 in cash and approximately 0.97 Fox Class A shares per share held, valuing the offer at $160 per share. Following the closure of the deal, existing Fox shareholders are anticipated to hold 73% of the combined company, with Roku shareholders owning the remaining 27%.
The transaction, subject to approval from both Fox and Roku shareholders as well as regulatory clearance, is anticipated to be finalized in the first half of the upcoming year. While Fox’s stock experienced a decline prior to the market opening, Roku’s shares saw a slight increase, reflecting market sentiment towards the acquisition.