Fox Is Buying Roku. Is It a Better Buy than Netflix, Disney, and Paramount Skydance?
Written by James Brumley for The Motley Fool -> The ongoing deterioration of the nation’s cable TV business is forcing studios and content creators to rethink how to connect with consumers. Roku’s place within the streaming market is unique, and well-defended. This is neither
The ongoing deterioration of the nation’s cable TV business is forcing studios and content creators to rethink how to connect with consumers.
Roku’s place within the streaming market is unique, and well-defended.
This is neither the first nor the last deal that the streaming business will sprout, but it arguably is the smartest.
The streaming industry's strategic consolidations continue, although the most recent one took more than a few investors by surprise. Just days after Paramount Skydance (NASDAQ: PSKY) cleared a major regulatory hurdle to move forward with its acquisition of Warner Bros. Discovery (NASDAQ: WBD) , media powerhouse Fox Corp. (NASDAQ: FOX) (NASDAQ: FOXA) announced on Monday, June 15, that it intends to purchase streaming technology outfit Roku (NASDAQ: ROKU) for $22 billion in stock and cash.
It's a good fit for several reasons, not the least of which is that the merger of two relatively small players in the business shouldn't raise any serious antitrust concerns that larger players might encounter. The bigger upside is simply that Roku's place in the industry offers a much more promising future than mere content creation -- a role increasingly rife with challenges that may never go away.
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On the off-chance you're not aware, Roku makes streaming hardware. It's best known for its set-top boxes that attach to a television, offering users a way to access their streaming services. More recently, though, it's licensed its tech and brand name to TV manufacturers.
In addition to hardware revenue, Roku receives payments from streaming services like Netflix and Paramount+ for promoting and distributing their programming. Indeed, this business accounted for 90% of Roku's total first-quarter revenue of $1.25 billion, versus only 10% from device sales and licensing.
