Fox Corporation made a number of commitments to federal regulators at the U.S. Department of Justice to get its $22 billion acquisition of Roku approved by the agency, according to a statement provided to The Desk on Friday.
The promises were made while Justice Department attorneys were scrutinizing the transaction on antitrust grounds, including whether the transaction would concentrate too much power within a single media company in the connected TV (CTV) industry.
According to Justice Department officials, Fox satisfied regulatory concerns by agreeing to carry non-Fox content across Roku’s platform for at least three years once the deal closed, and to not modify Roku’s search and discovery features in a way that substantially promote Fox’s own offerings like Fox One and Tubi above services offered by other companies.
Fox also said it will continue to “maintain existing contractual firewall commitments to content partners for competitively sensitive non-Fox content data,” including aggregated and non-aggregated data from third-party content providers, advertising firms and measurement services. As with its content carriage agreement, Fox said those contractual firewall commitments will last for at least three years from the date of closing.
For users, Fox promised to allow streamers to continue modifying certain parts of their Roku experience as before, to include removing content tiles for apps and services they don’t want. Prior to the transaction, Roku installed some of its own apps like The Roku Channel, Frndly TV and Howdy on its streaming devices and smart TVs by default, but users of its platform were able to remove those apps after the devices were fully activated.
Earlier this week, some Roku users expressed concern over the way Fox’s Election Night coverage was promoted across their home screens. On non-personalized devices, Roku switched the default home screen wallpaper to one that promoted the Fox One app, with banner advertisements appearing alongside app and content rows as well, according to screen captures reviewed by The Desk.
Before the transaction was announced in June, there were already signs of a cozy relationship between Fox and Roku: Just before the start of the FIFA World Cup tournament, Roku announced a hardware bundle that paired one of its low-cost streaming sticks with one month of access to Fox One for $25, a substantial savings off both products.
Once Roku and Fox announced the deal, Justice Department investigators began probing the matter, asking both companies to supply certain non-public records for review over the course of several months. Ultimately, the Justice Department determined that Roku’s offering of thousands of third-party apps and non-Fox content through its own services was enough to prove that the transaction would not harm competition in the CTV space, the Justice Department said on Friday.
“The (Justice Department) concluded that the entry of free, ad-supported streaming providers would be timely, likely, and sufficient to make a substantial risk of harm to competition unlikely,” the agency said in a statement. “Additionally, the investigation found that, because Roku relies on a broad offering of content from many providers to attract consumers, the merged firm would suffer monetary and reputational harm if it attempted to use the Roku platform to harm Fox’s content rivals.”
Federal regulators determined that customers aggrieved by Fox’s interference in Roku’s user experience can switch to another available platform, like Amazon’s Fire TV or Vega OS, Apple TV or Android TV (Google TV), which are widely available on the market. Amazon and Google compete against Roku with their own low-cost streaming devices, and Android TV is one of several platforms used by Walmart for its own line-up of streaming gadgets.
Smart TV makers also provide Roku competition, with LG, Samsung and Walmart’s Vizio developing their own CTV platforms. Charter and Comcast operate Xumo, a joint venture that develops CTV technology found on streaming set-top boxes and some smart TVs sold in stores.
“If the merged firm were to degrade the Roku platform, consumers could switch to other connected TV platforms,” the Justice Department affirmed.
But Roku’s dominance in the domestic streaming market is precisely why Fox was interested in the platform. Last year, Roku said more than 100 million users around the world were regularly accessing content from its CTV platform; most of those users are based in the United States.
Roku’s advertising and subscription business has regularly earned over $1 billion over the last few financial quarters; the company brought in $737 million in advertising revenue alone during its most-recent financial period that ended September 30. By comparison, Fox earned just under $2.1 billion during the same three-month window.
