FOX Corporation to Acquire Roku in $22 Billion Deal
The transaction values Roku at an enterprise value of approximately $22 billion, with FOX paying $160.00 per share in a combination of cash and stock.
Deal Structure and Financing
Under the terms of the agreement, FOX will pay $96.00 in cash and 0.9693 shares of FOX Class A common stock for each Roku share. Based on a reference price of $66.03 per FOX Class A common stock, the stock consideration represents $64.00 per Roku share.
FOX expects to fund the cash portion with a combination of new debt and cash on hand. The company has secured $12.0 billion in fully committed bridge financing from Morgan Stanley Senior Funding, Inc. Pro forma net leverage is expected to be approximately 2.8x.
Upon closing, existing FOX shareholders are expected to own approximately 73% of the combined company, with Roku shareholders owning approximately 27%. The deal is structured using non-voting shares to avoid diluting the Murdoch family's controlling stake.
Company Profiles
Roku, founded in 2002, reaches approximately 100 million global streaming households and is present in over half of U.S. broadband households. The company reported $4.74 billion in revenue.
FOX operates the Fox broadcast network, local stations, Fox News, Fox Business, Tubi (acquired for $440 million in 2020), and Fox One (launched in 2023). The company holds sports rights including NFL, MLB, NASCAR, Big Ten, and FIFA World Cup.
Strategic Rationale
The combined company is expected to become the third-largest U.S. television player by share of viewing across broadcast, cable, local, and streaming. The transaction aims to advance FOX's business mix toward high-growth streaming and connected TV verticals.
FOX CEO Lachlan Murdoch stated that the companies intend to keep Tubi and The Roku Channel separate after the deal closes, describing them as complementary services with approximately one-third audience overlap.
Tubi's viewership is predominantly on-demand, while The Roku Channel offers free channels similar to traditional pay TV bundles.
Financial Projections
FOX expects the transaction to be accretive to free cash flow per share by the second full year after closing. The company anticipates achieving approximately $400 million in run-rate cost synergies with additional revenue upside.
Governance
Roku Founder, Chairman, and CEO Anthony Wood will have an ongoing role at the combined company and will join the FOX Board of Directors following the close.
Market and Analyst Reactions
Following the announcement, FOX stock declined approximately 16-17% in morning trading. Roku stock fell approximately 2%, following a 20% gain on Friday on initial sale reports.
Analysts at Piper Sandler described the acquisition as a strategic fit, noting FOX's content pairs with Roku's distribution and first-party data. MoffettNathanson called the deal "an unexpected strategic pivot." LightShed Partners described it as a "bold move," noting FOX had been criticized for being underlevered and that Roku is a larger acquisition than investors expected.
Forrester's Mike Proulx commented that big media deals often face short-term market punishment due to uncertainty.
Background
This acquisition occurs approximately seven years after FOX sold its entertainment assets to Disney for $71 billion in 2019. Since then, FOX's portfolio has centered on its broadcast network, Fox News Channel, and free ad-supported streaming. FOX acquired Tubi in 2020 and launched its direct-to-consumer service Fox One in 2023.
The deal represents Lachlan Murdoch's first major move after the resolution of the Murdoch succession dispute, which left him in control of the family empire.
Approval and Timeline
The transaction has been unanimously approved by both companies' boards. It is subject to shareholder and regulatory approvals, with an expected close in the first half of calendar year 2027.