The $22 billion proposed acquisition of Roku this week wasn’t a huge surprise, with analysts long identifying the top streaming aggregator as a likely acquisition target. But it’s notable that Fox is the one that moved in first, considering its smaller media footprint vs. peers like Disney, Netflix, and Amazon and its decidedly more targeted content footprint mostly focused around news and sports. The deal, in which Fox will pay $160/share for Roku in a combination of cash and stock, will give the company’s free AVOD Tubi a new North Star to sweeten the proposition for advertisers (and potentially juice any programmatic CPMs) and perhaps more importantly give Fox access to incredible amounts of new customer data that Roku has been collecting for years. Combine that with what Tubi already knows about which content resonates with what customers, and it’s a powerful way to target them across the board. It’s also a potential boost for Fox One, which has its work cut out for it to convince sports and news junkies to pay up to $19.99/mo to access Fox’s substantial but certainly not comprehensive news-
and-sports coverage. It’s a lot. But it’s not everything, and surveys already suggest that consumers are cutting back on streaming expenses as overall inflation spikes. Promoting Fox One not only through Tubi but now within The Roku Channel and throughout the rest of the Roku screens will no doubt boost Fox’s customer acquisition efforts for Fox One. As for Roku CEO Anthony Wood, who founded Roku in 2002 and has coaxed the company to its current status, he will have an “ongoing role” at Fox and join the Fox board. Assuming the deal goes through, Wood will go from maverick entrepreneur to corporate suit in one fell swoop—and it will be interesting to see how much of his founder perspective influences Fox strategy in the coming years.
In a way, the proposed acquisition is an obvious and relatively simple way to add massive scale, with Fox already noting that the combined company would become the third largest player in U.S. TV viewing share. Expect Fox ad sales execs to shout that stat to the rooftops up and down Madison Avenue over the next few months as the companies move as fast as they can to close the deal. The acquisition announcement gave us a preview: “Together, FOX and Roku will create a scaled next-
generation media and technology company positioned at the intersection of two of the most important forces reshaping video consumption: the enduring primacy of live sports and news, and the continued rise of streaming.” That will be the prevailing pitch to advertisers, which will soon be able to sign big 360-degree deals that touch Fox broadcast and cable linear nets, Tubi, and the expansive Roku platform. None of this will put Fox at the level of a YouTube, which has been running away with TV viewing share (now 13.2%, according to Nielsen’s The Gauge) but it will put the company roughly on par with Disney at just over 5% and nipping at the heels of Netflix (8.2%). And unlike YouTube and Netflix, Fox can give advertisers access to more sports and live content living on those old linear nets that still represent most of the viewing of those two key genres. Again, it’s a powerful way for Fox to differentiate itself with brands and offer a wider breadth of options for companies that just want to both hypertarget specific demos (Tubi and Roku) while also hitting a broad swath of consumers through those traditional media channels. As Fox CEO Lachlan Murdoch put it, “this combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile… Roku pioneered streaming TV and scaled it into a leading CTV platform. Together, we intend to lead its next chapter.”
That next chapter will hinge on four key areas, according to Fox: Bigger scale and reach, an expanded ecosystem, better streaming tech including search-and-discovery and engagement (Roku’s pretty good at it), and a higher ratio of revenue derived from those high-growth streaming and connected TV verticals. That last one may be the most important and consequential for Fox, which remains more heavily dependent on broadcast and cable than many of its peers because of its purposely leaner and meaner stature following its 2019 sale of most of its cable and theatrical movie assets to Disney. By leaning into streaming and potentially matching Disney’s TV viewing share, Fox is poised to attract advertising deals that can at least tout similar scale when it comes specifically to TV and streaming platforms – boosted even more significantly by ownership of the leading way to aggregate consumer streaming eyeballs for brands that want to reach them. Disney remains a huge force that can tout its own strengths vs. Fox, but this deal would give Fox a way to scale up and offer advertisers a new level of data to better target their messages across both traditional and streaming.
Next? One big unanswered question is whether other studios like Disney and Paramount Skydance – not to mention cash-soaked Silicon Valley companies ranging from Amazon to Netflix to Apple or even a smart TV player like LG, Samsung, or Walmart’s Vizio – will try to scuttle the deal by offering their own higher bids. That could create a bidding war similar to the one that pushed Warner Bros. Discovery into Paramount’s arms as Netflix walked away (with a $2.8 billion consolation prize). In this case, either Roku or more likely any additional suitor would have to pay Fox an $866 million breakup fee if it ultimately accepted a better bid. That’s couch-cushion money for some of the companies listed above, especially on the Silicon Valley side, and stealing Roku away from Fox would enable any of them to lock up considerably valuable customer data that would only enhance their own considerable customer data wells. But this is an interesting regulatory environment in which the Trump Administration and its FCC and Department of Justice have openly signaled a willingness to look at media companies’ content as a factor in their merger reviews. And unlike some other potential suitors, the Murdoch’s have a mostly friendly relationship with Trump and the agencies he controls. That makes it less likely that others will put in bids. But Roku is a bit of a crown jewel in the streaming world. One or two big media companies could view any regulatory review as worth the risk to grab it. Stay tuned.
