Fox Corporation’s proposed $22 billion acquisition of streaming developer Roku is still awaiting approvals from certain federal regulators, but executives say the process is going smoothly and should is on track to close during the first few months of next year.
During the company’s conference call to discuss its latest earnings report on Monday, Fox CEO Lachlan Murdoch said the company has made “significant progress toward closing,” to include securing approvals from shareholders of both companies and getting the green-light from certain European regulatory bodies.
Roku does not have a robust international business, so gaining approvals within the European Union has been less challenging compared to other transactions involving major media companies, including Paramount’s purchase of Warner Bros Discovery (WBD).
Most of Roku’s 100 million-plus users are located in the United States, which Wall Street views as the more-mature market for connected television and streaming video. From an advertising and subscription standpoint, Roku is one of the stronger companies, earning $1.3 billion from its platform business during its most-recent financial quarter, according to figures released Monday.
Roku’s connected TV advertising and subscription income is expected to generate a significant boost to Fox’s own advertising business, which brought in nearly $2.1 billion during its most-recent financial quarter. Fox typically generates advertising revenue from its broadcast and cable networks and free streaming service Tubi, which will fall under common ownership with The Roku Channel and Howdy if the transaction closes.
For years, Roku flooded the market with low-cost streaming devices and smart TVs that allows TV, film and sports fans to access free and premium services like Netflix, YouTube, Prime Video, Disney Plus, ESPN and other apps without having to break the bank. The low barrier to entry and relative ease of use made Roku a popular choice for homes that were just starting to warm to streaming, especially as cable and satellite price hikes convinced more people to “cut the cord” in favor of cheaper, online options.
“Roku’s strength is its reach across the connected TV experience,” Michael Goodman, the Director of Entertainment at Parks Associates, said in September. “Its position across smart TVs and streaming media players gives the platform influence that extends beyond any single hardware brand.”
In the United States, Roku’s strategy of bringing low-cost, easy-to-use devices to market helped it capture more than 40 percent of streaming homes. By comparison, Amazon’s Fire TV platform holds just under 40 percent share, while Apple TV and Android TV are used by fewer homes stateside. (Fire TV and Android TV are more-popular overseas.)
The Roku deal still requires approvals from the U.S. Department of Justice on antitrust grounds, though Murdoch said he was sure that the agency will bless the deal in the near future.
“We are continuing to work cooperatively with the DOJ in order to obtain (antitrust) clearance, and expect to close the transaction as soon as we can,” Murdoch said.
Previously, executives said the deal should close during the first half of 2027, though the timing could be pushed if regulators elsewhere launch their own challenge.
Reached for comment earlier this summer, officials at the California Department of Justice declined to say if the state is looking into the deal or whether California Attorney General Rob Bonta might bring a challenge. Over the past year, the state has sought to block other media-related transactions, including Nexstar Media Group’s $6.2 billion acquisition of local broadcaster TEGNA and Paramount’s $111 billion purchase of Warner Bros Discovery (WBD). Roku is headquartered in California; Fox has TV and sports production facilities in the state, along with licensed TV stations in Los Angeles and Oakland.
Fox executives declined to answer additional questions about the Roku transaction during the company’s investor conference call on Monday, saying additional remarks will be submitted to the U.S. Securities and Exchange Commission as they warrant. Roku declined to hold a conference call with investors following the release of their earnings report on Monday, citing the pending Fox transaction.
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