The DEA grants Fox access to the more than 100 million households utilizing Roku’s streaming service.
Fox Corp is acquiring Roku through a cash-and-stock transaction valued at approximately US$22 billion, wagering that combining its sports and news content with a leading TV streaming platform will bolster its standing as audiences migrate online.
The transaction, revealed on Monday, provides Fox with entry to the over 100 million households using Roku’s streaming service, potentially enabling the cable TV-dependent media firm to more precisely target advertisements and decrease its dependence on conventional distribution. This marks Fox’s first significant purchase since CEO and chairman Lachlan Murdoch solidified his control over the media empire established by his father Rupert, following a family settlement last year.
Lachlan Murdoch on Monday characterized the Roku deal as a “defining moment” for Fox that merges “the most valuable live content portfolio in video consumption with the pre-eminent streaming platform through which America watches it”.
Fox shares dropped nearly 17 percent in early trading, likely due to worries about stock dilution from the deal. Roku declined 2.5 percent to US$140.10 and was trading below the offer price of US$160 per share.
As one of the initial companies to bring streaming platforms such as Netflix and YouTube to televisions via connected devices and smart TVs, Roku’s business is primarily fueled by advertising and subscription revenue from streaming apps on its platform. The firm also runs the free-to-watch Roku Channel.
Advertising represents its largest segment, generating revenue of US$613 million in the first quarter, a 27 percent increase year-over-year. Under the agreement, Roku investors will receive US$96 in cash and roughly 0.97 Fox Class A shares for each share held, valuing the offer at US$160 per share. This reflects a 33.7 percent premium over Roku’s close on Thursday, a day before publications including Reuters reported it was exploring options such as a sale.