Fox steps up streaming ambitions with $22 billion Roku acquisition

Fox is making its biggest bet yet on streaming TV.

The broadcast giant announced a $22 billion agreement to acquire connected TV powerhouse Roku on Monday in a cash-and-stock deal, which it expects to close in the first half of 2027.

This deal combines Fox's sports, news, and entertainment content with Roku's connected TV devices and digital ads business. Roku is the top connected TV platform and reaches over 100 million global streaming households, the companies said in their announcement. It also operates The Roku Channel, which is a leading free streaming service.

A Fox-Roku tie-up would create the third-largest player in US TV by share of viewing, according to Nielsen data. (It would be fourth-largest if Paramount Skydance acquires Warner Bros. Discovery.)

Buying Roku makes Fox an ad-selling machine. The company would own both the Roku Channel and Tubi, Fox's free, ad-supported streaming service. Tubi has become popular with Gen Z for its quirky original shows and a deep library of nostalgic content like "Everybody Hates Chris" and "Looney Tunes."

This deal marks "a defining moment" for Fox, CEO Lachlan Murdoch said in a statement.

"This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile," Murdoch added.

Nearly half of Roku's revenue comes from advertising, including spots on its coveted home screen. The company also has a healthy subscription business, which accounted for 39% of its $5 billion in revenue over the last 12 months. Roku takes a cut of streaming subscriptions when users sign up through its interface, and it also introduced a $3 a month, ad-free streamer, Howdy, last August.

Investors seemed wary of the deal, as Fox shares fell 12% in premarket trading. Roku's stock was halted earlier, after rising 20% on Friday.

How Fox sidestepped the streaming wars

Instead of going all-out to beat Netflix like other Hollywood giants, Fox sold its studio, its stake in Hulu, and key franchises like Avatar to Disney in a $71 billion blockbuster deal that closed in 2019.

A year later, Fox acquired Tubi for $440 million. Last year, it launched Fox One, its own subscription livestreaming service, on which it is currently broadcasting the World Cup, as well as its news and entertainment programming. It also has Fox Nation, a paid streamer that has conservative-friendly programming.

Fox said in its announcement that it was committed to continuing to operate Roku as "an open partner-friendly platform."

Lightshed Partners media analyst Rich Greenfield said in an interview on CNBC on Monday that Fox was acquiring a "TV gatekeeper."

"Whether it's Netflix, whether it's Paramount+, whether it's Prime Video, anyone who wants to have a streaming service has to play ball with Roku," Greenfield said.

Media analyst Mike Proulx of Forrester said Fox's Roku deal helps the company "close a strategic streaming gap from content supplier to platform owner. "

"It's been the only major broadcast network without a scaled streaming anchor to match Disney+, Peacock, or Paramount+. Roku brings scale, data, and its operating system and Fox brings premium live sports and news, creating a closed-loop connected TV advertising engine," Proulx said.