• by Wayne Friedman , 5 hours ago

Shaking up the streaming TV industry, Fox Corp. is buying streaming distributor Roku for $22 billion in a combination of cash and Fox Corp. stock.

Fox will pay $160 per share to Roku shareholders -- which is at a 34% premium for the Roku stock before the deal was announced.

“This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile,” said Lachlan Murdoch, executive chair/CEO of Fox Corp., in a statement. "Roku pioneered streaming TV and scaled it into a leading CTV platform. Together, we intend to lead its next chapter.”

Fox says the deal will immediately increase its scale and reach when it comes to advertising and subscription business, getting into 100 million global streaming homes -- and about half of all U.S. broadband households.

Madison and Wall estimates the combined company will have around $9 billion in advertising revenue, representing around 14% of all advertising spend in the U.S. and around a 16% share of U.S. streaming ad spending.

“With the acquisition of Roku, Fox is not simply adding another streaming service. It is buying a scaled CTV platform, a major ad-supported streaming destination, and a television OS with valuable viewing, distribution, and measurement data," says Madison and Wall.

“[Fox Corp.] CEO Lachlan Murdoch has talked about making acquisitions given the strength of the company’s balance sheet,” said Richard Greenfield, partner, media/technology analyst at LightShed Partners, in a note on Friday before the deal.

He added: “Given how tied Fox is to the legacy TV ecosystem, a Roku acquisition would enable Fox to meaningfully reposition its narrative with investors toward a streaming future that began with its Tubi acquisition.” 

Fox’s 2020 deal for Tubi channel  -- a FAST network (free, ad-supported/streaming television) -- continues to be a sharply rising platform in terms of advertising sales.

On Friday, on rumors of a possible sale of Roku, the company’s stock soared 20%, closing at $143.66.