Fox Wants More Than Streaming Devices in Its Roku Buyout

Fox has agreed to buy Roku in a deal worth about $22 billion, bringing together a traditional media company and one of the most familiar names in streaming television. At first glance, it may look like Fox is buying a maker of streaming sticks and smart TV software. In reality, the company is buying access. Roku sits on millions of television screens across the United States. For many households, it is the starting point for watching Netflix, YouTube and dozens of other streaming services. That position has helped Roku build a sizeable advertising business and become an important gatekeeper in the streaming market.

A Shortcut to Streaming Households

Fox, meanwhile, has spent years trying to adapt to a television industry that no longer revolves around cable subscriptions. The company owns Tubi, a free streaming service supported by advertising, but it still relies heavily on its sports and news businesses. The Roku acquisition gives Fox something it has never really had before: a direct connection to more than 100 million streaming households. That audience comes with valuable advertising opportunities. Roku generated $613 million in advertising revenue during the first quarter, up 27% from a year earlier. As advertisers continue shifting spending from traditional television to digital platforms, those numbers have become increasingly attractive.

Bringing Two Free Streaming Brands Together

The deal also brings together two free streaming brands. Fox owns Tubi, while Roku operates The Roku Channel. Both compete for viewers looking for free content without monthly subscription fees. Fox is paying $160 per share, an 11.4% premium to Roku’s previous closing price. Investors appeared uncertain about the acquisition’s price tag, with Fox shares falling in pre-market trading following the announcement.

The Battle for the TV Home Screen

The bigger question is whether owning a platform will prove more valuable than simply supplying content to one. Media companies spent years fighting for viewers’ attention. Increasingly, they are also competing for control of the screens where that viewing begins. If the deal closes as expected next year, Fox will own both the programming and one of the most widely used routes through which audiences find it. Existing Fox shareholders are expected to own about 73% of the combined company, while Roku shareholders will hold the remaining 27%.