Fox Corp is acquiring Roku in a cash-and-stock deal valued at approximately $22 billion, betting that combining its sports and news programming with a leading TV streaming platform will bolster its position as audiences shift online.
Deal Details
The transaction, announced on Monday, grants Fox access to more than 100 million households using Roku's streaming platform. This move could help the cable TV-reliant media company improve ad targeting and reduce dependence on traditional distribution.
It marks Fox's first major acquisition since CEO and Chairman Lachlan Murdoch solidified control over the media empire built by his father Rupert, following a family settlement last year.
Lachlan called the deal a "defining moment" for Fox, bringing together "the most valuable live content portfolio in video consumption with the preeminent streaming platform through which America watches it."
Fox shares fell 8% in premarket trading, while Roku rose 2.6% to $147.5, below the offer price of $160 per share.
Strategic Rationale
Roku, one of the first companies to bring streaming platforms like Netflix and YouTube to televisions via connected devices and smart TVs, generates most of its revenue from advertising and subscriptions on its platform. It also operates the free-to-watch Roku Channel.
Advertising is Roku's largest revenue component, with $613 million in the first quarter, up 27% year-over-year.
Under the deal, Roku investors will receive $96 in cash plus approximately 0.97 Fox Class A shares for each share held, valuing the offer at $160 per share.
While Fox dominates cable TV with its sports lineup and Fox News, its streaming presence is limited to the free service Tubi, as cord-cutting accelerates the shift from traditional television.
Buying Roku gives Fox more heft in ad-supported streaming, with the combined company expected to become the third-largest player in US television by viewership, according to the companies.
"This gives Fox greater control over discovery, data and monetization at a time when TV viewing continues to shift away from traditional channels," said PP Foresight analyst Paolo Pescatore.
Financials and Approval
Fox shareholders will own roughly 73% of the combined company after closing, with Roku investors holding the remainder.
The boards of both companies have unanimously approved the transaction, expected to close in the first half of calendar year 2027 and generate about $400 million in annual cost savings.
Fox plans to fund the cash portion through new debt and cash on hand, backed by $12 billion in committed bridge financing from Morgan Stanley.
