Fox to buy Roku for $22 billion
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Fox Corporation said Monday it has reached a definitive agreement to acquire Roku in a cash-and-stock deal valued at roughly $22 billion, or $160 per share.
Why it matters: The combination would create a free streaming powerhouse by combining Roku's free ad-supported channel with Tubi, Fox's free ad-supported service.
- It also gives Fox access to one of the largest TV operating systems in the U.S., expanding its business further from content to distribution.
- Roku reaches 100 million households globally.
The big picture: The deal reinforces Fox's strategy to focus on live TV content and free ad-supported streaming, Fox executive chair and CEO Lachlan Murdoch said in a statement announcing the deal.
- "This is a defining moment for FOX, and a natural extension of the deliberate and focused strategy we have been executing for nearly a decade. In 2019, we reoriented the company around live news and sports," he said.
- "This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile."
Zoom in: Upon closing, existing Fox shareholders will own approximately 73% of the combined company, while Roku shareholders will own about 27%.
- Fox plans to finance the deal through a combination of new debt and cash on hand. The company said it has secured fully committed bridge financing from Morgan Stanley Senior Funding.
- Fox said the acquisition is expected to be accretive to free cash flow per share by the second full year after closing and generate roughly $400 million in cost synergies.
- Roku founder, chairman and CEO Anthony Wood will join Fox's board and serve in an ongoing role at the combined company upon completion of the transaction.
- The transaction has already been unanimously approved by the boards of directors of both firms.
Between the lines: The deal offers Roku a lifeline in a competitive market.
- The streaming giant's growth has been challenged by increased competition, impacting its ability to consistently post profits until last year.
What's next: The deal, which is subject to regulatory approval, is expected to close in the first half of calendar year 2027.
This is breaking news, and this story may be updated.
