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- Roku’s subscriber base consists of more than 100 million global households
- Purchase safeguards Fox against falling cable and advertising revenues
- Deal expected to close in first half of 2027
Fox is buying streaming software and hardware firm Roku for US$22 billion, significantly expanding its digital scale and advertising capabilities.
Roku’s 100 million-strong user base will dramatically increase the reach of Fox’s Tubi free-ad-supported television (FAST) offering and Fox One direct-to-consumer (DTC) subscription product. Indeed, the combined company will become the third-largest player in US television by viewership share, according to the firms.
But more than that, Fox will gain access to 100 million home screens, allowing it gather valuable behavioural data and the ability to sell advertising at a platform level, not just around content.
The deal sees Fox double down on an approach to streaming that differs greatly from that of ABC, CBS and NBC, whose parent companies have invested billions in technology, marketing and content to support premium multi-genre DTC platforms.
Rather than risk cannibalising lucrative carriage fees, Fox has stuck with the tried and trusted cable model that has served it so well for so many decades.
It focused spending on key sports rights that attract huge live audiences and even took advantage of other’s desperation to make the switch to digital by selling its film and television studios to Disney, which wanted to bolster its Disney+ offering, for US$71 billion.
Fox has always known it would have to react to cord cutting at some point but it has refused to get involved in an increasingly saturated segment of the market where churn is a constant risk. Instead it has launched Fox One, a no frills, relatively low cost service that caters to news and sports fans while Tubi has diversified and futureproofed its advertising strategy.
Now with Roku, it can amplify those efforts and act as an aggregator in an increasingly fragmented marketplace.
While Fox reported a 23.5 per cent decline in advertising revenue during Q3 this year, a figure which was impacted by the lack of a Super Bowl broadcast, Roku’s Q1 revenue increased by 28 per cent to US$1.13 billion as advertising and subscription revenues increased 27 per cent and 30 per cent respectively.
“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,” said Lachlan Murdoch, Fox chief executive.
“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. This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile.”
Anthony Wood, Roku’s founder, chairman and chief executive, will remain with the combined company and join Fox’s board following completion of the deal.
“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.
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