Fox to buy Roku for $22 billion

Fox Corp. has struck a deal to acquire Roku for approximately $22 billion, in a move that signifies further consolidation in the media industry amidst changing dynamics and challenges.

Under the agreement announced on Monday, Fox will acquire Roku for $160 per share in a cash-and-stock transaction. The cash portion of the deal will be funded through a mix of available cash and new debt, with a $12 billion loan secured for the transaction.

Following the news, Fox’s stock saw a 17% decline in morning trading, while Roku experienced a 2% drop, despite a 20% increase on Friday following initial reports of a potential sale.

The merger will bring together Fox’s news and sports channels, along with its ad-supported streamer Tubi, with Roku, a leading provider of streaming devices and the home of The Roku Channel, a service similar to Tubi.

Describing the acquisition as a “defining moment” for the company, Fox CEO Lachlan Murdoch highlighted the strategic importance of the deal.

This acquisition comes after Fox’s previous major deal seven years ago, when it divested its entertainment assets in a $71 billion transaction with Disney. Since then, Fox’s focus has been primarily on its TV channels, particularly the broadcast network Fox and Fox News Channel.

With the acquisition of Tubi in 2020 and the launch of Fox One, a direct-to-consumer option, the company has been making strategic moves in the streaming space.

During an investor call on Monday, Murdoch emphasized Fox’s shift towards live news and sports, as well as its focus on driving advertising revenue.

As media companies prioritize advertising to support their streaming platforms and leverage live sports and events for large audiences, the combination of Tubi and The Roku Channel is seen as complementary.

Wood, Roku’s CEO, highlighted the company’s strong platform business in advertising and subscriptions, reaching over 100 million streaming households globally.

Both companies expressed confidence in the deal, with Murdoch stating that the acquisition of Roku will enable Fox to expand into new markets and drive digital growth.

Projected to yield around $400 million in cost synergies and additional revenue opportunities, the deal is expected to close in the first half of 2027, subject to regulatory approvals.

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

Wood described Roku’s platform as a market leader in the U.S., with a global reach of over 100 million streaming households and 145 billion hours of engagement annually.

Both companies view the deal as a strategic move and an opportunity for growth in the digital streaming landscape.

After the acquisition, existing Fox shareholders are expected to own approximately 73% of the combined entity, while Roku shareholders will hold around 27%.

The deal, approved by both companies’ boards of directors, is set to be finalized in the first half of 2027.