Fox has reached an agreement to purchase the popular streaming company Roku in a deal worth about $22 billion in cash and stock, including debt. This acquisition will grant Fox 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, acquired in 2020.
Roku was founded by Anthony Wood, who previously worked at Netflix in the early 2000s during the transition from DVD rentals to video streaming. The company was later spun off from Netflix, launching its first set-top box in 2008. Wood, currently serving as Roku’s chairman and CEO, was inspired to pursue this technology by his love for the TV show “Star Trek.”
As one of the pioneers in bringing streaming services like Netflix and YouTube to TVs through connected devices and smart TVs, Roku primarily generates revenue from advertising and subscriptions from streaming apps on its platform. The company also operates the popular Roku Channel.
Advertising forms a significant part of Roku’s revenue, reaching $613 million in the first quarter, marking a 27% increase year-on-year. Both companies have confirmed that Roku will continue to operate as an open platform for partners. The combined entity is set to become the third-largest player in U.S. television in terms of viewership share.
Fox CEO Lachlan Murdoch expressed excitement about merging Fox’s live news and sports content with Roku’s extensive streaming platform, enhancing advertising and subscription opportunities. Roku’s Wood highlighted the partnership as a chance to accelerate innovation for viewers, partners, and advertisers.
Following the acquisition, Wood will retain a role within the company and join the Fox board of directors. Analyst Paolo Pescatore from PP Foresight believes that this strategic move gives Fox more control over advertising-supported streaming amid shifting TV viewing trends.
Under the deal, Roku investors will receive $96 in cash and approximately 0.97 Fox Class A shares per share held, equating to $160 per share. Upon completion, existing Fox shareholders are expected to own around 73% of the newly formed company, with Roku shareholders holding the remaining 27%.
The deal is anticipated to close in the first half of the upcoming year, pending approval from shareholders of both Fox and Roku, as well as regulatory clearance. Fox’s stock experienced a decline pre-market open, while Roku’s shares saw a slight increase.