Fox Corp. and streaming technology powerhouse Roku have entered a definitive agreement under which Fox will acquire Roku for $160 per share in a combination of cash and Fox Class A common stock, valuing Roku at approximately $22 billion in enterprise value, the companies said on Monday.
The transaction combines Fox’s sports, news, and entertainment content and the Tubi streaming service with Roku’s connected TV platform, The Roku Channel, first-party data and direct relationship with more than 100 million global streaming households, the deal partners touted.
Lachlan K. Murdoch, executive chair and CEO of Fox, on an morning analyst call called the acquisition a “defining moment” for his company, and one that “pairs Fox, the leader in live news and sports, with Roku, the leading connected TV platform. This acquisition will strengthen and expand our position in the high growth digital video ecosystem and unlocks new ways to serve our audiences and partners.”
Murdoch added the Roku acquisition, which followed picking up Tubi in 2020, continued a strategy of “focus over scales’s sake” that avoids getting caught up in the arms race around the streaming industry. “Our achievements give us great confidence in our ability to enhance growth inside the enlarged Fox Corporation,” he added.
Murdoch argued Roku helped Fox navigate a fast-evolving streaming sector, to include the continued distribution of Fox and Tubi content: “We are seeing a clear consumer preference for aggregation. Consumers are gravitating towards simpler, more unified experiences on their favorite platforms like Roku.”
On a pro forma basis, the combined company will become the third-largest player in U.S. television by share of viewing, “with an attractive mix of Fox’s sports, news, and entertainment content, alongside streaming services Tubi and The Roku Channel,” the companies said. “That distribution and engagement scale spans every major viewing environment – broadcast, cable, local, and streaming – creating broad and diversified reach that benefits viewers, partners, and advertisers.”
Anthony Wood, founder, chairman and CEO of Roku, said that his team has over the past two decades built Roku into “the leading TV streaming platform, reaching more than 100 million households globally and reshaping how people discover and enjoy entertainment.” He also called the Fox deal “an extraordinary opportunity to accelerate our vision, scale faster, and innovate more aggressively for viewers, partners, and advertisers” at “a significant premium to Roku shareholders, while also providing them with the opportunity to participate in the compelling future upside of the combined company.”
The companies highlighted several strategic benefits of the big deal. One is increased scale and reach, with the firms noting that together, they will “encompass premium live content, broad distribution, and significant audience reach across linear and streaming.”
Another benefit they pointed to is an expansion in “high-growth verticals.” Namely, the deal “positions Fox across the full video ecosystem and provides a wider entry into the high-growth segment of connected TV, particularly advertising and streaming subscriptions,” according to the deal announcement.
It also opens up routes to “a more powerful streaming platform,” bringing together Fox’s “premium content and advertising capabilities with Roku’s consumer interface, home screen, platform technology and direct viewer relationships to enhance content discovery, deepen engagement and create a more compelling streaming experience for consumers and content partners.”
Last, but not least, Fox touted the deal’s benefits to the “long-term growth profile.” It “advances Fox’s business mix toward high-growth streaming and connected TV verticals and maintains a balanced mix across advertising and distribution businesses, while strengthening the combined company’s long-term growth and financial profile,” all while maintaining Fox’s “disciplined capital allocation approach.”
The Roku deal is in line with Murdoch’s talk about possible acquisitions due to the company’s healthy balance sheet.
Just on Friday, LightShed Partners analyst Rich Greenfield cited Fox as a potential acquirer of Roku. “Given how tied Fox is to the legacy TV ecosystem, a Roku acquisition would enable Fox to meaningfully reposition its narrative with investors toward a streaming future that began with its Tubi acquisition,” he explained, adding that it was “worth noting that Fox sold its 6 million shares of Roku at $58 back in 2020 to help finance the acquisition of Tubi. In turn, it would definitely be ironic if Fox bought Roku now.”
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