Fox’s Roku deal pushes company deeper into streaming platforms
Fox agreed to buy Roku for $22 billion, drawing a sharp stock selloff even as analysts said the deal gives Fox scale, data and ad reach.
By Sofia Marchetti · World Affairs Correspondent
3 min read
Fox Corp. agreed to buy Roku for $22 billion, a deal that would move the company from a narrower bet on streaming content into ownership of a major streaming platform. The transaction matters because Fox has largely avoided the expensive subscription-streaming race while relying on news, sports and its free service Tubi.
Fox said Monday it would acquire Roku in a cash-and-stock deal. The purchase would add Roku’s streaming hardware and software business, its more than 100 million households using the platform, and The Roku Channel to a portfolio that already includes Fox’s broadcast network, cable channels, Tubi and Fox One.
Investors reacted poorly. CNBC reported that Fox shares fell 16% Monday, touching a 52-week low, and dropped another 4% Tuesday.
Piper Sandler analyst Thomas Champion wrote Monday that the companies fit strategically because Fox can pair its content with Roku’s distribution, first-party data and advertising tools. Champion said Roku’s reach and Fox’s sports rights are highly complementary, and estimated that the combined company would rank third in U.S. viewing share across broadcast, cable, local TV and streaming.
Analysts see a shift in strategy
MoffettNathanson described the deal Monday as an unexpected strategic pivot for Fox. LightShed Partners called it a bold move and said Roku was far larger than the kind of acquisition many Fox investors had anticipated, even though Fox executives had spoken about using the company’s balance sheet for deals.
Fox has followed a different course from several large media rivals. CNBC reported that Paramount, Comcast and Netflix were among the companies that pursued Warner Bros. Discovery assets earlier this year before Paramount emerged with a pending deal that remains under regulatory review.
Fox sold much of its entertainment business to Disney in 2019, leaving it focused on live sports and news. The company remains closely associated with Fox News Channel, while sports such as NFL games and the FIFA World Cup continue to draw viewers and advertising revenue, according to CNBC.
Fox bought Tubi in 2020 for less than $1 billion and has made the free, ad-supported service its main streaming effort. Fox also launched Fox One last year as a direct-to-consumer product carrying its content, including sports and news.
Forrester vice president and research director Mike Proulx told CNBC by email that large media acquisitions are often hit in the short term because they create uncertainty. He said investors appeared to be questioning the near-term tradeoff, while the longer-term value for Fox comes from owning the platform, data and advertising stack.
Roku brings distribution and ad tools
MoffettNathanson said combining Tubi and Roku would place Fox near the upper tier of streaming viewership. The firm estimated that the combined viewing share would edge past Disney’s Disney+, Hulu and ESPN.
Roku also gives Fox a stronger role in how streaming services reach viewers. Roku negotiates with media companies to carry apps on its platform, controls prominent placement on its home screen, and receives a share of advertising revenue from some streamers when their content is watched through Roku, according to CNBC.
LightShed Partners said the deal could give Fox more leverage in carriage talks. MoffettNathanson said the acquisition could help Fox compete for future premium sports rights.
For Roku, analysts said the deal ties its platform to Fox’s sports and news programming and combines two advertising businesses. CNBC reported that Roku shares reached a 52-week high Friday after early reports of a possible sale and had risen about 50% for the year through last week before those reports.
MoffettNathanson also pointed to risks for Roku, including media consolidation and Walmart’s 2024 purchase of smart TV maker Vizio. The firm said Walmart, a major seller of smart TVs, has been slower than expected to gain share through Vizio, though that could change and put more pressure on Roku to match rivals’ scale.
This story draws on original reporting from CNBC.