Source : the age
Fox Corporation has agreed to buy the streaming pioneer Roku in a cash-and-stock deal valued at approximately $US22 billion ($31 billion), including debt.
The deal will give Fox access to more than 100 million global households, along with the Roku channel and its first-party data. Fox oversees a massive sports, news and entertainment network, as well as Tubi, which it acquired in 2020.
Roku founder Anthony Wood had initially worked within Netflix in the early 2000s as that company attempted to make the seismic shift from renting DVDs, to streaming.
Roku was spun off by Netflix, however, and the company released its first set-top box in 2008.
Wood, who is Roku’s chairman and CEO, said his motivation in pursuing the technology was his desire to record and play his favourite show, Star Trek.
The companies said on Monday that Roku will continue to be run as an open, partner-friendly platform. Fox and Roku said that the combined company will become the third-largest player in US television by share of viewing.
Fox Corp chief executive Lachlan Murdoch said in a statement that combining the businesses will bring together Fox’s live news and sports content with a streaming platform that has a large viewership. It will also give Fox more exposure to advertising and streaming subscriptions.
“Consumers are gravitating toward simpler, more unified experiences on their favourite platforms like Roku,” Murdoch said. “Advertisers are reaching similar conclusions, seeking large audiences, improved digital targeting and more consistent measurement across platforms.”
Wood said: “The combination with Fox is an extraordinary opportunity to accelerate our vision, scale faster and innovate more aggressively for viewers, partners and advertisers.”
Wood will have an ongoing role at the company and will join the Fox board of directors after the transaction closes.
Fox will pay $US96 ($136) in cash and 0.9693 shares of its Class A common stock for each Roku Class A and Class B share outstanding. The transaction is valued at $US160 ($226) per Roku share.
On Monday, Fox’s stock declined before the market opened, while shares of Roku rose slightly.
Roku shares slid about 1.9% to $US140.95 ($198.93) as trading got under way in New York, while Fox shares tumbled 18%. The sharp decline in Fox shares means the stock component of the agreement would be worth less if it holds through the closing of the deal.
Existing Fox shareholders are expected to own approximately 73% of the combined company, and Roku shareholders will own about 27%, once the deal closes.
The deal is expected to close in the first half of next year. It still needs approval from Fox and Roku shareholders, as well as regulatory approval.
Roku’s streaming devices helped usher in the era of digital home entertainment by allowing consumers to stream content from apps including Netflix and HBO Max on their televisions, essentially transforming any TV into a smart TV.
The company also sells branded TVs and projectors. But Roku makes most of its money selling digital advertising and distributing streaming services, with device sales contributing a much smaller portion of revenue.
The platform segment generated $US4.1 billion ($5.8 billion), or 87.5%, of the company’s revenue last year, slightly more than the previous year. The company keeps prices low on hardware to attract users, whose viewing habits it sells to advertisers, which is where the bulk of the growth potential is.
AP, Bloomberg
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