Fox to buy Roku for $22 billion

Fox Corp. has reached an agreement to acquire Roku for roughly $22 billion, marking another chapter in media consolidation as the industry grapples with changing dynamics and mounting challenges.

On Monday Fox announced it would acquire Roku for $160 per share in a cash-and-stock transaction. Fox plans to fund the cash portion of the deal with a combination of cash on hand and new debt. The company said it obtained a $12 billion loan for the transaction.

Fox’s stock was down 17% in morning trading Monday. Roku fell 2%, though that stock gained 20% on Friday around initial reports of a potential sale.

The combination will bring together Fox’s news and sports channels as well as its free ad-supported streamer Tubi with Roku, the maker of streaming devices and also the home of The Roku Channel, a service similar to Tubi.

On Monday, Fox CEO Lachlan Murdoch called it a “defining moment” for the company.

The proposed acquisition comes about seven years after Fox’s last major deal, when it shed its entertainment assets in a $71 billion deal with Disney. Since then, Fox’s portfolio has primarily been made up of its TV channels, namely broadcast network Fox, which has been airing the FIFA World Cup since last week, and the Fox News Channel on cable.

In 2020 Fox acquired Tubi for $440 million. That service had long been its answer to the streaming wars, before the announcement of Fox One, its direct-to-consumer option that launched last year.

On a Monday call with investors, Murdoch noted that Fox was both “an early investor in Roku and a longtime commercial partner.”

He added that since 2019 Fox has “reoriented” the company, centering it around live news and sports, and emphasized the focus on driving advertising revenue.

Advertising has taken a renewed importance for media companies as they look to build up streaming platforms and lean on live sports and events, which are capturing the biggest audiences.

Murdoch said on Monday’s call with investors that the companies intend to keep Tubi and The Roku Channel separate after the deal closes. He called them “incredibly complementary services” that see about a third of overlap between their audiences.

Tubi sees a majority of its viewership for on-demand content, in contrast to the free channels that mimic the traditional pay TV bundle.

“Roku has a very large platform business that consists of advertising and subscriptions,” said Roku CEO Anthony Wood on Monday’s call.

Wood called Roku’s platform a market leader in the U.S. and said it reaches more than 100 million streaming households globally, counting 145 billion hours of engagement…