The streaming wars have had plenty of surprises and deals that made perfect sense. We also reckon we’ve seen about seventy billion different streaming apps by this stage, but one of the most well renowned streamers has a new parent company in the shape of Fox. The company behind Fox News, Fox Sports, Fox Entertainment, and Tubi is set to spin the Wheel of Streaming Forture and this time, they’ve landed on… Roku.
Fox Corp. is buying Roku in a cash-and-stock deal valued at approximately $22 billion, including debt. The agreement will give Fox access to the Roku Channel, Roku’s first-party data, and a platform that reaches more than 100 million global streaming households. For Fox, which already owns the free ad-supported streaming service Tubi, it represents a huge expansion for them in the streaming and connected TV space.
As for the numbers portion of the announcement, Fox will pay $96 in cash and 0.9693 shares of its Class A common stock for each outstanding Roku Class A and Class B share. The transaction values Roku at $160 per share, so once the deal closes, existing Fox shareholders are expected to own approximately 73% of the combined company, while Roku shareholders will own around 27%.
Why Is Fox Buying Roku?
Fox has stated that Roku will continue to operate in the same way which is important for its long term success, given how many major entertainment companies rely on Roku’s platform to reach viewers through apps, channels, and advertising partnerships. Roku tends to operate more as a gateway for streamers rather than a brand in its own right, and they’ve been keen to reassure their current partners that nothing will be changing in the short term. Fox and Roku were also keen to point out that said the combined business will become the third-largest player in U.S. television by share of viewing.
That would place Fox in a stronger position as traditional TV continues to shift toward streaming, ad-supported platforms, and connected devices. The deal also helps Fox in terms of its data and distribution, because Roku’s viewing data can now be shared with Fox. That becomes really valuable for Fox as advertisers look for new ways to reach viewers. Combined with their current data, plus Tubi in their portfolio as well, Fox is now in a pretty strong position.