FOX is poised to strengthen its position in the ad-supported broadcast market. On Monday, the media company led by Lachlan Murdoch announced it would buy smart TV company Roku for $22 billion, or $160 billion (about 14 percent above Roku's current market value) in a cash and stock deal. The deal, which is expected to close next year, will combine Fox's sports, news and entertainment programming and the Tubi platform with Roku's TV ecosystem and Roku Channel. The merger will create the third-largest streaming platform in the US, according to the report Chalemon of the marketfurthering Murdoch's vision for the “next chapter” of Fox following the 2019 sale of its entertainment assets to Disney.
The acquisition will also give Fox access to Roku's more than 100 million global streaming homes. That reach equates to Tubi's more than 100 million active users worldwide, a milestone Fox has built since acquiring the platform in 2020.
In recent years, the entertainment industry has been shaped by a wave of mergers and acquisitions, from the Paramount-Skydance deal to the battle for Warner Bros. Acquisition between Paramount and Netflix.
Against a backdrop of streaming wars and the continued decline of traditional cable and pay TV subscribers, Roku represents a strategic move for Fox to stay competitive. With direct access to first-party viewership data across more than 100 million households, Fox can deliver more personalized ads, especially as live games continue to grow in value. eMarketer projects connected TV (CTV) ad spending will reach $47 billion by 2028, surpassing linear TV, while Nielsen reported that Roku and Tubi have surpassed services such as Peacock and HBO Max in viewership.
According to both companies, Fox and Roku “are committed to continuing to use Roku as an open, partner-friendly platform” and expect to maintain “universal” distribution of Fox content.
“This is a defining moment for FOX, and a natural extension of the deliberate and focused strategy we've been implementing for nearly a decade,” said Lachlan Murdoch, CEO and executive chairman of Fox Corp., in a statement.
Murdoch noted that since 2019, Fox has restructured its business around live news and sports, and its acquisition of Tubi in 2020, which has grown to become one of the company's most successful broadcast businesses.
He added that the combination will “transform” the company's scale into a growth model and “represent a step change” in its overall growth profile. Fox reported $3.99 billion in revenue for the January-March quarter, down from $4.37 billion a year earlier, on revenue of $175 million. Despite the decline in advertising revenue, Tubi's revenue increased 23 percent, and total watch time increased 19 percent, driven by its catalog of creator-led and original Tubi titles. Meanwhile, Roku reported revenue of $1.25 billion in the March quarter, up from $1.02 billion a year earlier.
Roku founder, chairman and CEO Anthony Wood, who is expected to remain involved in the combined company and join Fox's board after the deal closes, said he is “very proud” of what his team has built, adding that combining with Fox is “an incredible opportunity to accelerate our vision, scale quickly and aggressively innovate for advertisers.”
