Fox to buy Roku for US$22 billion to fuel streaming push

Fox Corp is buying Roku in a cash-and-stock deal valued at about US$22 billion in a bet that pairing its sports and news programming with a top TV streaming platform ‌will strengthen its position as audiences shift online.

The deal, announced on Monday, gives Fox access to the more than 100 million households using Roku’s streaming platform, potentially helping the cable TV-reliant media company better target ads and reduce reliance on traditional distribution. It is Fox’s first major acquisition since CEO and chairman Lachlan Murdoch cemented control over the media empire his father Rupert built, following a family settlement last year.

Lachlan Murdoch on Monday called the Roku deal a “defining moment” for Fox that brings “together the most valuable live content portfolio in video consumption with the pre-eminent streaming ⁠platform through which America watches it”.

Fox shares fell nearly 17 per cent in early trading, likely on concerns about stock dilution from the deal. Roku ticked down 2.5 per cent to US$140.10 and ⁠was trading below the offer price of US$160 per share.

One of the first companies to bring streaming platforms like Netflix and YouTube to television through connected devices and smart TVs, Roku’s business is largely driven by advertising and subscription revenue from streaming apps on its platform. ‌The company also operates the free-to-watch Roku Channel.

Advertising is its largest component, with revenue of US$613 million in the first quarter, up ⁠27 per cent year-on-year. Under the deal, Roku investors ⁠will receive US$96 in cash and about 0.97 Fox Class A shares for each share held, valuing the offer at US$160 per share. That represents a 33.7 per cent premium to Roku’s close on Thursday, ‌a day before publications including Reuters reported it was exploring options including a sale.