Fox sells Roku stake to acquire Tubi in $440MN deal | Major Businesses | Business
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In an indication of the growing strength of the ad-supported streaming video industry and the Murdoch-owned firm’s desire to stay in the video arena, Fox Corporation has entered into a definitive agreement to acquire Tubi.
tubi 14Oct2019
Tubi has enjoyed a stellar previous twelve months, claiming record growth for 2019 which drove it to be the world’s largest free ad-supported video-on-demand (AVOD) service. It is currently available on more than 25 digital platforms in the US and is also available in Canada and Australia and in the coming year is set to launch in additional territories including Mexico and the UK. The service has a younger-skewing and directly connected user base that spends over 160 million hours per month watching content and features over 20,000 titles and 56,000 hours of film and episodic television programming from over 250 content partners, including many of the major studios.

Fox says that the combination of Tubi’s reach, the resonance of its content and the quality of its technology platform have doubled the service’s usage and monetisation over the last 12 months. It adds that the acquisition, worth approximately $440 million in net cash consideration, underscores the company’s long-term strategic initiatives to broaden and enhance its direct-to-consumer digital reach and engagement.

Initially, Fox plans to continue to run Tubi as an independent service and will then evaluate opportunities to expand the Tubi offering not through original content, but from existing Fox US national and local news and sports programming. Tubi will also integrate with Fox’s capabilities in areas such as digital advertising, direct-to-consumer interfaces and personalisation technology. Similarly, Tubi will be able to fully take advantage of Fox’s advertising and distribution relationships, as well as its US promotional platforms.

“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,” commented Fox Corporation executive chairman and chief executive officer Lachlan Murdoch. “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.”

Tubi Founder and CEO Farhad Massoudi, who will continue to head Tubi, added: “Fox Corporation’s relationships with advertisers and distribution partners, combined with the company’s dominance in news and sports programming, will help Tubi continue to grow and differentiate itself in the high-growth ad-supported streaming marketplace.”

FOX will finance the Tubi acquisition principally with the net proceeds from the completed sale of its stake in online video platform Roku. In doing so, Fox says that it has preserved its balance sheet capacity by essentially exchanging a passively held minority investment for full ownership and control of a leadership position in the free ad-supported streaming market.

The Tubi transaction, which is subject to regulatory approvals and the satisfaction or waiver of customary closing conditions, is expected to close before 30 June 2020.