Fox agrees Roku acquisition in $22bn streaming push

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Fox agrees Roku $22bn deal

Highlights

Fox will acquire Roku for $160 per share in a $22 billion deal, funded by new debt and $12 billion bridge financing from Morgan Stanley.
Fox expects $400 million in cost synergies and free cash flow accretion by the second full year post-closing, integrating Roku with assets like Tubi.
Fox shares fell 13.3% in pre-market trading as investors reacted cautiously amid intensifying competition in streaming platforms and TV operating systems.

Deal terms and strategic rationale

As first reported by Financial Times, Fox says it will acquire Roku for $160 a share through a mix of cash and Fox stock, in a move that deepens its bet on connected television and digital distribution.

The media group, controlled by the Murdoch family, says Roku's platform complements Fox's portfolio of live news and sports while adding connected TV devices, branded televisions and a growing digital advertising business. Fox also says Roku will continue to operate as an open platform, even as the company integrates the streaming business with its existing assets, including ad-supported service Tubi.

Lachlan Murdoch, Fox chief executive, calls the transaction a defining moment for the company and says it extends a strategy that Fox has been pursuing for nearly a decade. Roku founder and chief executive Anthony Wood is set to take a role in the combined company and join the Fox board.

Financing, synergies and industry impact

Fox says the acquisition will be accretive to free cash flow per share by the second full year after closing and will deliver $400 million in cost synergies. The company says it will fund the cash portion with a combination of new debt and existing cash, and has secured $12 billion in fully committed bridge financing from Morgan Stanley Senior Funding.

Investors react cautiously, with Fox shares down 13.3% in pre-market trading. The deal comes as the U.S. media landscape continues to reshape quickly, after the U.S. Department of Justice last week approved Paramount's proposed $111 billion acquisition of Warner Bros Discovery.

Roku remains one of the early companies that pushed streaming into the U.S. mainstream by giving viewers access on television sets to services such as Netflix, HBO Max and YouTube. Analysts at Wolfe Research say a buyer could sell Roku's advertising inventory more effectively and benefit from its influence over consumer viewing decisions, but they also point to rising competition in TV operating systems from Google TV, Amazon Fire TV and WalMart's newly acquired Vizio OS.

In our earlier article on U.S. midday trading moves, we noted that Fox shares fell sharply after the company announced a $160-per-share cash-and-stock deal to acquire Roku. That roundup also placed the move in the context of other session drivers, including notable reactions to corporate headlines and shifting commodity prices that reshaped sector performance.

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