Fox's $22 Billion Roku Acquisition Reshapes Its Streaming Business

Key Points

• Fox completed its $22 billion acquisition of Roku on Nov. 6, aiming to expand its streaming reach and advertising capabilities.
• Both companies reported strong quarterly results beforehand, with Roku posting 24% revenue growth and Fox achieving record adjusted EBITDA of $1.64 billion.
• Fox expects $400 million in annual cost savings within two years, but must navigate regulatory commitments and integration challenges to realize the deal's benefits.

The $22 billion acquisition of Roku is officially complete, and Fox NASDAQ: FOX now faces the task of turning its expanded streaming business into a stronger source of growth and profitability.

The deal closed on Nov. 6, just four days after both companies reported strong quarterly earnings. Roku's advertising and subscription revenue continued to climb, while Fox posted record fiscal first-quarter revenue and adjusted EBITDA.

Together, the results provide an encouraging starting point for the newly combined company. But with Roku no longer trading independently, investors must now evaluate whether Fox can capitalize on its expanded streaming reach, deliver anticipated cost savings, and translate the acquisition into stronger shareholder returns.

What Fox Gains From Bringing Roku Into the Fold

In a press release announcing the acquisition on June 15, Fox touted how the $22 billion cash-and-stock deal with Roku would position the company as a leader in scaled media and technology, with superior reach, engagement, and monetization capabilities.

By combining Fox's premium live content with Roku's streaming platform, the company gains access to Roku's network of more than 100 million households worldwide, expanding its reach and connected TV advertising capabilities.

CEO Lachlan Murdoch called the acquisition a defining moment for Fox, describing it as a natural extension of the strategy the company has pursued for nearly a decade. That strategy has included a greater focus on live news and sports, as well as the 2020 acquisition of free streaming platform Tubi.

The deal further shifts Fox toward higher-growth streaming businesses while maintaining its established advertising and distribution operations.

Under the finalized transaction terms, Roku shareholders received $95.30 in cash and 0.9799 shares of Fox Class A common stock for each Roku share. Former Fox shareholders now own approximately 74% of the combined company, with former Roku shareholders holding the remaining 26%. Roku founder Anthony Wood has joined Fox's board and serves as co-chair of the newly formed Fox Digital Platforms division.

Fox expects approximately $400 million in annualized cost savings within two years of closing and anticipates that the deal will increase free cash flow per share by the second full year after closing. Achieving those targets will be an important measure of whether the acquisition delivers the financial benefits management expects.

Roku's Q3 Earnings Highlight the Growth Fox Just Acquired

Roku's final quarterly earnings report as an independent public company demonstrated why its streaming platform was an attractive acquisition target.

For Q3, Roku reported earnings per share (EPS) of $1.20, which handily beat the consensus estimate of 55 cents. Quarterly revenue rose more than 24% year over year (YOY) to $1.5 billion, surpassing analysts' expectations of $1.41 billion.

The earnings and revenue beats weren't the only takeaway. Net income increased approximately 639% YOY, from $24.8 million to $183.3 million, while adjusted EBITDA more than doubled to $248.8 million.

Advertising revenue grew 23% YOY to $727 million, marking Roku's ninth consecutive quarter of double-digit growth. Advertising gross margin reached 63.2%, an improvement of approximately 470 basis points YOY, supported by a shift toward higher-margin advertising products.

Subscriptions revenue also grew 23% YOY to $581 million, reflecting continued demand for Roku's subscription and billing services. Together, advertising and subscriptions generated approximately $1.3 billion in platform revenue, making them central to the company's growth.

Roku also generated approximately $796 million in trailing 12-month free cash flow, giving Fox an established, cash-generating streaming business.

Not every part of Roku's business performed as strongly. Devices revenue increased 33% YOY to $194 million, but the segment recorded a $48.6 million gross loss, with higher memory costs weighing on profitability.

For Fox investors, the opportunity lies in expanding Roku's higher-margin advertising and subscription businesses, while managing hardware profitability challenges and preserving the platform's appeal to advertisers, content partners, and viewers.

Fox's Record Q1 2027 Earnings Provide Financial Momentum

Fox also entered the acquisition with considerable financial momentum, as reflected in its fiscal Q1 2027 earnings.

Adjusted EBITDA grew 54% YOY to a record $1.64 billion, while adjusted EPS of $2.54 exceeded the analyst consensus of approximately $2.06. Quarterly revenue increased 22% to $4.57 billion, surpassing expectations of $4.32 billion.

Advertising revenue climbed 47%, supported by Fox's broadcast of the 2026 FIFA Men's World Cup, political advertising, and continued digital growth. Distribution revenue increased 9%, demonstrating strength across the company's established television businesses.

Tubi revenue increased 35%, with view time up 23%. Management said Tubi's growth is continuing into the current quarter and expects the business to reach roughly 20% margins at maturity.

However, Fox's latest advertising growth also benefited from major sporting events and political spending, which can fluctuate significantly between reporting periods. Investors should distinguish that event-driven revenue from the underlying growth in the company's streaming businesses.

What Could Determine Fox Stock's Next Move?

With the acquisition complete, Fox's next challenge is execution. The company must integrate Roku while preserving the qualities that made its platform valuable in the first place.

Regulatory concerns had threatened to complicate the transaction, particularly questions about whether Fox might favor its own streaming services over competitors using Roku's platform. But the Department of Justice closed its antitrust investigation on Nov. 6 after Fox committed to maintaining Roku as an open and neutral content partner.

Those commitments include continuing to carry competing content, avoiding discrimination against non-Fox services in search results, and maintaining protections for sensitive third-party data.

Although the regulatory review is complete, those obligations place important boundaries around how Fox can integrate and monetize its new streaming businesses. Preserving Roku's relationships with competing content providers will be essential to its long-term success.

Investors also have to consider the acquisition's financial implications. Fox funded the cash portion of the transaction using cash and debt financing, making balance-sheet management and free cash flow generation increasingly important.

The two companies entered the merger with considerable operating momentum, but strong results before the combination don't guarantee equally strong performance afterward.

For investors, the key developments to watch are Roku's advertising and subscription growth, Tubi's expansion, and progress toward the $400 million annual cost-savings target. Whether those gains translate into sustained earnings and free cash flow growth will ultimately determine the acquisition's success.