Fox Corp. announced the purchase of Roku , in another step by the traditional media company to adapt to the transformations brought about by streaming .
Fox News' parent company has agreed to buy the American company that transforms regular televisions into smart TVs for a total of $160 per share, consisting of $96 per share in cash and 0.9693 shares of Fox stock.
The transaction assumes an equity value of US$25 billion and an enterprise value of US$22 billion for Roku. Fox shareholders will own 73% of the combined company, with the remainder held by Roku investors.
The acquisition, expected to be completed next year, is Fox's latest move to reposition the company in the face of the new market landscape, where fewer and fewer people are subscribing to cable TV . In 2020, the company bought the Tubi platform for US$440 million and, last year, launched its own service, Fox One.
In a presentation to analysts regarding the acquisition on Monday, June 15th, Fox executives highlighted that streaming's share of total television viewership in the United States jumped from 25% in 2020 to 48%.
Meanwhile, approximately 98% of major television broadcasts in the United States are news and live sports, areas in which Fox has been focusing since selling its entertainment operations and catalog to Disney in 2017.
With Roku, Fox gains a base of 100 million connected devices to distribute its content, positioning itself at the intersection between live content production and the distribution and offering of streaming services. The company emphasized that Roku will remain open to other companies.
“This is a pivotal moment for Fox and a natural extension of the deliberate and focused strategy we have been executing for nearly a decade,” said Lachlan Murdoch, CEO of Fox, in a statement. “This combination will transform the scope of our company into high-growth verticals and result in a significant shift in our overall growth profile.”
Founded in 2002 by Anthony Wood, a former Netflix employee, Roku has become the leading name in the US market for television connectivity devices, accounting for 44% of the hours Americans spend watching content through these platforms.
The company reported revenue of US$1.2 billion in the first quarter, a 22% increase year-over-year. Advertising accounted for 49% of the total, while service subscriptions represented 41%; the remainder came from device sales.
In the first three months of the year, Roku posted a profit of $85.7 million, reversing the loss recorded a year earlier.
The deal stipulates that Wood, who currently serves as president and CEO of Roku, will join Fox's board of directors.
