Fox has reached an agreement to acquire the streaming pioneer Roku in a transaction combining cash and stock, totaling around $22 billion US, inclusive of debt. This deal will provide Fox with access to over 100 million households globally, including the Roku channel and its valuable first-party data. Fox, known for its extensive sports, news, and entertainment network, including Tubi acquired in 2020, will now integrate Roku into its portfolio.
Roku was established by Anthony Wood, who previously worked at Netflix in the early 2000s during the transition from DVD rentals to streaming. Initially part of Netflix, Roku became an independent entity and introduced its first set-top box in 2008. Wood, currently serving as Roku’s chairman and CEO, was inspired by his love for the TV series “Star Trek” to develop the technology for recording and playback.
As one of the early adopters 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 Roku Channel, offering free content to viewers.
Advertising stands as Roku’s primary revenue source, totaling $613 million in the first quarter, marking a 27% increase year-over-year. Both companies have confirmed that Roku will continue to operate as an open and partner-friendly platform. The merger positions the combined entity as the third-largest player in U.S. television viewership share.
Fox CEO Lachlan Murdoch emphasized the synergies between the two businesses, combining Fox’s live news and sports content with Roku’s significant streaming platform audience, enhancing advertising and subscription opportunities for Fox. Roku’s Wood expressed enthusiasm for the collaboration, citing the potential to accelerate innovation and growth for viewers, partners, and advertisers.
Wood will retain a role within the company and join the Fox board post-transaction closure. Analyst Paolo Pescatore praised the acquisition as a strategic move by Fox to strengthen its presence in ad-supported streaming, enhancing control over content discovery, data utilization, and revenue generation in a shifting TV landscape.
Under the terms, Roku shareholders will receive $96 US in cash and approximately 0.97 Fox Class A shares per Roku share, valuing the offer at $160 US per share. Post-merger, Fox shareholders are anticipated to hold around 73% of the combined entity, with Roku shareholders owning the remaining 27%.
The deal is slated to conclude in the first half of the following year, pending approvals from both Fox and Roku shareholders, as well as regulatory clearance. Fox’s stock saw a decline ahead of the market opening, while Roku’s shares experienced a slight increase.