Roku, a popular stateside brand of streaming hardware and smart TVs, has held discussions with at least one media company focused on a sale, according to multiple reports published on Friday.
The reports — first from Bloomberg, then from Reuters — caused Roku’s stock to rise more than 20 percent in after-hours trading. The reports were based on unnamed sources, and the identity of the media company was not reported.
It is not uncommon for media and entertainment companies to selectively leak details of possible transactions during an exploratory phase in order to see how the broader market reacts to the news. It wasn’t clear if that was the case here, since none of the reports offered much detail into how the discussions between Roku and its possible suitors were progressing.
Roku did not respond to requests for comment from news outlets on Friday.
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Roku controls around 40 percent of the streaming hardware market in the United States, where it first started selling standalone streaming boxes more than a decade ago that allowed consumers to access apps like Netflix, Prime Video and YouTube.
Over time, Roku’s business model has shifted from sales of streaming boxes and smart TVs to one focused primarily on advertising and commissions from subscription sales on its platform. To saturate the market with its devices, Roku typically sells its hardware and smart TVs at or below what it costs the company to make and ship in order to get its devices in as many homes as possible and making up the difference on advertising sales.
During the first three months of the year, Roku earned more than $1.1 billion from its platform business, mostly from advertising. The figure was ten times higher than its income earned from hardware sales, according to financial disclosure forms reviewed by The Desk.
