Fox strikes US$22 billion deal for Roku to fuel streaming push

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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 (Jun 15), 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 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 preeminent streaming platform through which America watches it".

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Fox shares fell 8 per cent in premarket trading. Roku rose 2.6 per cent to US$147.5, but traded below the offer price of $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.

STREAMING BOOST

While Fox dominates cable TV with its sports lineup and top-rated Fox News, its streaming presence is limited to free-to-watch service Tubi at a time when cord-cutting by consumers is accelerating the shift from traditional television.

Buying Roku gives it more heft in ad-supported streaming, with the combined company set to become the third-largest player in US television by viewership, the companies said.

"This gives Fox greater control over discovery, data and monetisation at a time when TV viewing continues to shift away from traditional channels," PP Foresight analyst Paolo Pescatore said.

"Bringing together premium content, live sports, advertising and platform distribution under one roof creates a compelling proposition."

Fox shareholders will own roughly 73 per cent of the combined company after closing, with Roku investors holding the rest.

The boards of both companies have unanimously approved the transaction, which is expected to close in the first half of calendar year 2027 and generate about US$400 million in annual cost savings.

Fox plans to fund the cash portion through new debt and cash on hand, backed by US$12 billion in committed bridge financing from Morgan Stanley.

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