Fox Buys Roku in $22bn Streaming Deal: What It Means

Fox Corporation is buying Roku in a cash-and-share deal worth roughly $22bn (about £16.3bn), a bet that bolting its sports and news output onto America’s best-known streaming platform will shore up its position as audiences drift away from traditional television.

The transaction hands Fox a direct line into the more than 100 million households that already use Roku’s streaming devices and smart-TV software. For a business still heavily dependent on cable distribution, that reach offers two prizes at once: a far richer pool of first-party data with which to target advertising, and a route to market that does not run through the pay-TV bundle it has leaned on for decades.

It is the first major acquisition Lachlan Murdoch has overseen since taking the reins of the empire his father, Rupert, assembled. Murdoch, who chairs both Fox and The Times publisher News Corp, described the deal as a “defining moment” that brings “together the most valuable live content portfolio in video consumption with the preeminent streaming platform through which America watches it”. It is also the latest in a run of outsized media-and-technology tie-ups, coming hot on the heels of Elon Musk’s $80bn merger of X and xAI, as owners race to fuse content, platforms and data under one roof.

“In 2020, we acquired Tubi, and under our stewardship it has become one of the most successful businesses in streaming,” Murdoch said. “Today, we take the next step.” That earlier punt on free, ad-supported television has paid off handsomely: Fox’s decision to launch Tubi in the UK underlined how seriously the group now takes the free-streaming market it once treated as an afterthought.

Investors were less enthusiastic about the price tag. Fox shares slid 8 per cent in pre-market trading as the market digested the cost and the share issuance involved. Roku climbed 2.6 per cent to $147.50, though it remained well shy of the $160-a-share offer, a gap that typically signals lingering doubt over whether a deal will complete on its stated terms.

What Roku brings to the table

Roku was among the first companies to carry services such as Netflix and YouTube onto the television set through connected devices and smart TVs. Its income is driven largely by advertising and by subscription revenue earned from the streaming apps that sit on its platform, and it also runs the free-to-watch Roku Channel. Advertising is the larger engine: the platform business generated $613m of revenue in the first quarter, up 27 per cent year on year.

That trajectory matters because the wider market has been anything but smooth. As cash-strapped UK households cancel streaming subscriptions to trim spending, ad-funded “free” tiers have emerged as the industry’s growth story, exactly the territory where Roku and Tubi are strongest.

Under the agreement, Roku shareholders will receive $96 in cash plus about 0.97 Fox Class A shares for each share they hold. That values the company at $160 a share, a premium of 33.7 per cent to Roku’s closing price on the Thursday before reports emerged that it was weighing its options, a sale among them.

While Fox dominates cable through its sports rights and the top-rated Fox News, its streaming footprint has so far been confined to Tubi. Roku widens that considerably, and the enlarged group expects to become the third-largest player in US television by viewership. Fox shareholders will own roughly 73 per cent of the combined company once the deal closes, with Roku investors holding the balance.

Both boards have approved the transaction, which is expected to complete in the first half of next year, according to reporting by Variety and The Hollywood Reporter.

For SME advertisers and media buyers watching from this side of the Atlantic, the significance is less about the headline figure than about the model it endorses: live content plus a distribution platform plus the data to monetise both. If Murdoch’s wager pays off, the combination of premium live programming and connected-TV reach could reset what advertisers expect to buy, and how cheaply challenger brands can reach a national audience.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.