Fox has made an agreement to acquire Roku, a pioneer in streaming services, in a deal involving cash and stock valued at around $22 billion US, including debt. This acquisition will grant Fox 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, as well as the Tubi platform acquired in 2020, stands to benefit from this strategic move.
Roku was founded by Anthony Wood, who previously worked at Netflix during its transition from DVD rentals to video streaming in the early 2000s. 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 to pursue streaming technology by his passion for the TV show “Star Trek.”
As a trailblazer 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, which is free to watch.
Advertising is a significant revenue driver for Roku, with earnings reaching $613 million in the first quarter, marking a 27% increase year-over-year. Fox and Roku announced that the combined entity will maintain an open and partner-friendly platform, positioning them as the third-largest player in U.S. television viewership share.
Lachlan Murdoch, CEO of Fox, highlighted the synergies between Fox’s live news and sports content and Roku’s extensive streaming reach, which will enhance advertising and subscription opportunities for Fox. Anthony Wood expressed excitement about the collaboration, emphasizing the potential to accelerate innovation and scale more rapidly for viewers, partners, and advertisers.
Under the terms of the deal, Roku investors will receive $96 US in cash and approximately 0.97 Fox Class A shares for each share held, valuing the offer at $160 US per share. Upon completion of the transaction, existing Fox shareholders are anticipated to hold a 73% stake in the combined company, while Roku shareholders will own approximately 27%.
The acquisition is subject to approval from Fox and Roku shareholders, as well as regulatory clearance, with the expected closing in the first half of the following year. Fox’s stock experienced a decline prior to the market opening, while Roku’s shares saw a slight increase, reflecting market sentiment towards the deal.