NEW YORK and SAN JOSE, Calif.—Fox Corp. announced today that it is acquiring Roku, the world’s leading connected TV platform in a cash and stock transaction valued at approximately $22 billion ($160 per share).
The acquisition will give Fox a strong foothold in what is considered the fastest growing segment in the TV advertising market, connected TV (aka “CTV”) and free ad-support TV (aka "FAST"), and an expanding market for its live news and sports programming, according to Lachlan K. Murdoch, Executive Chair and Chief Executive Officer of Fox Corp.
The deal, if approved, would give Fox a stronger platform for its Fox One direct to consumer streaming services launched in 2025 and a unique position among media companies—owning a major broadcast network, one of the largest FAST services (Tubi), a leading TV OS, a premiere CTV platform and a leading streaming service (The Roku Channel).
Bringing all of those platforms together in a combined media ecosystem will bring the company closer to offering advertisers a more holistic approach to media programming, distribution and monetization for both live/linear and streaming/on-demand services.
“This is a defining moment for Fox, and a natural extension of the deliberate and focused strategy we have been executing for nearly a decade,” he said. “In 2019, we reoriented the company around live news and sports. In 2020, we acquired Tubi, and under our stewardship it has become one of the most successful businesses in streaming. Today, we take the next step: bringing together the most valuable live content portfolio in video consumption with the preeminent streaming platform through which America watches it.”
The transaction combines Fox’s sports, news, and entertainment content and the Tubi service with Roku’s leading connected TV platform, The Roku Channel, first-party data and direct relationship with more than 100 million global streaming households. Fox said its acquisition of 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.”
Roku Founder, Chairman and CEO Anthony Wood will join the combined company and its board.
“I’m incredibly proud of what our team has built, and the combination with Fox is an extraordinary opportunity to accelerate our vision, scale faster, and innovate more aggressively for viewers, partners, and advertisers,” Wood said. “That’s why our Board of Directors unanimously determined after concluding its strategic review process that this transaction offers a significant premium to Roku shareholders while also providing them with the opportunity to participate in the compelling future upside of the combined company. I couldn’t be more excited about what we’ll accomplish together.”
Fox and Roku said they are “committed to continuing to operate Roku as an open, partner-friendly platform and to the continued ubiquitous distribution of Fox content.”
In its investor call this morning, Murdoch emphasized the importance of maintaining Roku’s extensive partnerships with competitors such as Netflix, Amazon or Disney.
“It is essential that Roku remain an open and partner-friendly business,” he said. “We're in a business that we have tremendous partners who really rely on Roku for a lot of their distribution, and we don't see that changing at all from a Fox perspective.
Wood added that “Roku has a very large platform business [that] consists of advertising and subscriptions. A lot of that business is driven by promotion of our partners, and our goal is to grow that business. It's not for that business to retreat, so we're going to continue to grow that business. That means that means working closely with partners to do that."
On a pro forma basis, the combined company will become the third-largest player in U.S. TV by share of viewing, spanning “every major viewing environment—broadcast, cable, local, and streaming – creating broad and diversified reach that benefits viewers, partners, and advertisers.”
Upon closing, existing Fox shareholders are expected to own approximately 73% of the combined company and Roku shareholders approximately 27%. The transaction has been unanimously approved by the Boards of Directors of both companies. The transaction is expected to strengthen Fox's long-term growth profile, accelerate its digital strategy, be accretive to free cash flow per share by the second full year after closing, and achieve approximately $400 million of run-rate cost synergies with additional revenue upside.
Fox expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on hand. Fox has obtained $12.0 billion of fully committed bridge financing from Morgan Stanley Senior Funding, Inc. At closing, the company expects pro forma net leverage to be approximately 2.8x, inclusive of 50% credit for run-rate cost synergies. Additional detail on financing terms will be included in the companies' required filings with the Securities and Exchange Commission.
