Fox Corp. has agreed to take streaming pioneer Roku in an all-cash deal that values it at about $22 billion, including .
As the two companies announced Monday, Roku will continue to operate as an open, partner-friendly platform, with no immediate changes expected to be felt by consumers. At the same time, Fox and Roku pointed out that the resulting joint corporate structure will now be the third largest “player” in American television, based on viewership share.
The background of the takeover and the “suitors”
As early as Friday, there were press reports that wanted Roku to consider its strategic options, including a possible sale. Speculation as to which companies might be interested in acquiring it was intense. In addition to Fox, the names being floated as possible buyers included giants like Netflix, Amazon, Comcast and Disney.
The golden deal, the data and the story with Netflix
The deal gives Fox access to more than 100 million households worldwide, along with Roku’s digital channel and valuable first-party data. Fox operates a massive network of sports, news and entertainment programming, as well as the Tubi platform, which it acquired in 2020.
The company’s history is worth noting: Roku founder Anthony Wood originally worked at Netflix in the early 2000s, when the company was attempting its seismic shift from DVD rentals to mainstream streaming. Roku eventually spun off from Netflix and launched its first set-top box in 2008.
Wood, who serves as president and CEO at Roku, revealed that his motivation for developing this technology was his personal desire to be able to write and reproduce his beloved series, “Star Trek.”
Strategy for the next decade
Fox Corp. Chief Executive Officer Lachlan Murdoch said in a statement that the merger of the two businesses would unite Fox’s live news and sports content with a massively-watched streaming platform. At the same time, it will give Fox greater exposure to advertising revenue and streaming subscriptions.
“Partnering with FOX is a great opportunity to accelerate our vision, grow faster and innovate more dynamically for the benefit of our viewers, partners and advertisers,” Wood said in a written statement.
Wood will retain an active role in the company and join Fox’s board of directors after the transaction closes. During a conference call, Murdoch emphasized that the new, unified company would be better positioned for the next decade in video than either would be on its own. “We are confident that this is the right transaction, at the right time, for all the right reasons,” he noted.
The financial terms of the deal and market reactions
Under the financial terms, Fox will pay $96 in cash and 0.9693 of a Class A share for each Class A and Class B common share of Roku. The transaction values Roku at $160 per share.
After the deal closes, existing Fox shareholders are expected to own about 73% of the combined company, while Roku shareholders will control the remaining 27%.
The acquisition is expected to close in the first half of next year, pending Fox and Roku shareholder approval, as well as related regulatory approvals.
On Wall Street, after the news was announced on Monday, Fox shares free-falled 16%, while Roku posted a small retreat.
