Fox Corp. has acquired the streaming service Tubi TV for $440 million in cash, the company said Tuesday. At the same time, it has also sold its 5 percent stake in the streaming platform Roku, using the proceeds to help finance the acquisition.
The Tubi acquisition, which had been rumored for weeks, gives Fox a direct-to-consumer streaming platform that users spend 160 million hours per month watching, the company claims.
Tubi, which primarily streams non-exclusive licensed TV shows and movies, will operate as an independent subsidiary of Fox, with founder and CEO Farhad Massoudi continuing to lead the service. In addition to the $440 million in cash, Fox may owe $50 million in deferred considerations and unvested options over a three-year period.
As for Fox’s plans for the service, the company says it will “evaluate opportunities to expand the Tubi offering not through original content, but rather in a cost-effective manner by leveraging our expertise in national and local news and sports programming.”
It will also use the streamer to bolster its advertising business.
“Tubi will immediately expand our direct-to-consumer audience and capabilities and will provide our advertising partners with more opportunities to reach audiences at scale,” Fox CEO Lachlan Murdoch said in a statement. “Importantly, coupled with the combined power of Fox’s existing networks, Tubi provides a substantial base from which we will drive long-term growth in the direct-to-consumer arena.”
Fox has owned the stake in Roku since 2013, which appreciated significantly since the streaming platform went public in September 2017.
According to The Wall Street Journal, Fox approached Morgan Stanley to help offload the stake, with the bank acquiring six million shares and selling them to investors for $58 a piece.
Fox said that in selling the stake, it was “essentially exchanging a passively held minority investment for full ownership and control of a leadership position in the free ad-supported streaming market.”
Fox’s acquisition of Tubi is latest move by big media companies to buy their way into the free streaming market. Comcast bought the streaming service Xumo last month, and Viacom bought Pluto TV last year.