Fox Corp. to Acquire Tubi Free-Streaming Service for $440 Million, Sells Roku Stake

Fox Corp. said it will acquire Tubi, the ad-supported free streaming service, for $440 million in cash — a deal funded largely from Fox’s sale of its 5% stake in Roku.

With Tubi, Rupert Murdoch’s TV broadcasting and cable company adds a dedicated streaming component to capture the rising internet-video tied: Tubi offers over 20,000 older TV shows and movies to watch for free and claims to have a base of 25 million active monthly viewers.

“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 Corp. executive chairman and 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.”

It’s the latest move by a TV conglomerate to dive into the so-called streaming wars, a trend that continues to reshape the media landscape. Fox’s deal for Tubi highlights the industry’s bullishness toward AVOD — ad-supported video-on-demand — as a discrete battleground from the subscription VOD space dominated by Netflix. A year ago Viacom (now ViacomCBS) acquired free-streaming startup Pluto TV for $340 million in cash, while Comcast last month bought Xumo, a free advertising-supported streaming service reportedly for over $100 million. This summer Comcast and NBCUniversal plan a nationwide launch of Peacock, which will include a free AVOD version.

Fox expects the deal for Tubi to close by the end of June 2020 subject to regulatory approvals and other closing conditions. The pact for Tubi includes up to $50 million in additional payments in the form of deferred consideration and unvested options over the next three years.

Fox said it plans to continue running Tubi as an independent service, headed by Tubi founder and CEO Farhad Massoudi. As of the end of 2019, Tubi had about 229 employees, up 78% for the year.

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,” Massoudi said.

By snapping up Tubi and selling its Roku stake, Fox said it is “essentially exchanging a passively held minority investment for full ownership and control of a leadership position in the free ad-supported streaming market.” Lachlan Murdoch said in a statement, “We were an early investor in Roku and continue to admire the ongoing accomplishments of [CEO] Anthony Wood and his team.”

Fox Corp.’s business comprises Fox Broadcasting and local TV stations, Fox News and Fox Business, and Fox Sports, after the dismantling of 21st Century Fox and the sale of most of 20th Century Fox’s assets to Disney last year.

Tubi was founded as AdRise, a video ad-tech startup in 2010. It launched Tubi TV in 2014 and eventually changed its name and focus to ad-supported VOD. The company has raised $34 million from investors including Lionsgate, MGM, Jump Capital, Cota Capital, Foundation Capital, Streamlined Ventures and individuals including Bobby Yazdani, Mark Amin, and Noosheen and Zod Nazem.

Tubi offers 20,000 library movies and TV series — all for free with ads — from over 250 content partners including Warner Bros., Paramount, Lionsgate and NBCUniversal. In December 2019, according to Tubi, its monthly active user base grew to 25 million (up from 20 million six months earlier) while total viewing time hit over 163 million hours watched, a 160% year-over-year increase. (The figures aren’t independently verified.)

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