Fox Stock Is Down 15% After Announcing a $22 Billion Roku Deal. Is This a Buying Opportunity?

The highly competitive streaming and television space continues to experience consolidation.

On June 15, Fox Corp. (NASDAQ:FOX) announced it had reached an agreement to acquire Roku (NASDAQ:ROKU) in a deal already approved by both companies’ boards of directors.

Fox will pay $22 billion in enterprise value for Roku ($25 billion equity value), valuing the hardware streaming company at $160 per share, a 28% premium to its June 10 price.

The deal will be 60% funded by cash and 40% through equity.

To help fund the deal, Fox plans to take on $8.3 billion of new debt and has secured bridge financing. Fox will also issue 152 million of class A shares.

As of 1:17 p.m. ET today, shares of Fox traded over 14% lower. Shares of Roku were down slightly, but had risen significantly late last week on takeover rumors. Following Fox’s decline, is this a buying opportunity?

Image source: Getty Images.

What Fox is getting

While both are in the television and streaming space, Fox and Roku are different companies.

Roku licenses its devices to streaming services and other television providers, earning fees for content and subscriptions purchased on Roku devices. Roku also has a strong ad business.

Over the past year, Roku has generated about $5 billion of revenue. Roughly half comes from advertising, 39% from subscriptions, and 11% from the sale of various Roku devices.

Roku generated a 44% gross margin over the past year and projects free cash flow of over $1 billion in 2028.

This mix should be attractive to Fox, which generated over 58% of its revenue in the past nine months from advertising. The rest of Fox’s revenue comes from distribution and content.

Fox also owns the streaming service Tubi, which has roughly 100 million monthly active users and over 1 billion monthly streaming hours.

Roku is the leading connected TV device, accounting for 44% of total U.S. hours spent viewing content on connected TV devices, as of the fourth quarter of 2025.

The acquisition of Roku will make Fox the third-largest media provider in TV viewership, with 10.2% market share, catapulting the company past Paramount Skydance and Netflix.

Is this a buying opportunity?

Fox’s stock is down big today, likely due to expected shareholder dilution from the deal. Following today’s decline, Fox’s market cap is just over $22 billion, about the size of the Roku acquisition on an enterprise-value basis.

However, investors may be worried about another factor of the deal, according to a team of analysts at the advisory and consulting firm Madison Wall.

“Roku exposes Fox in a significant way to the low-margin OEM (original equipment manufacturing) business, which has many different dynamics when compared to the current version of Fox,” the firm wrote in a research note, according to Barrons.

“Roku’s revenues are by now majority advertising-dependent, but its costs primarily relate to manufacturing and related software development as well as physical marketing and distribution of its devices.”

The deal is expected to deliver $400 million in cost synergies at Fox, with additional revenue upside.

Furthermore, the acquisition is projected to be accretive to free cash flow within two years of closing, which is expected to occur within the first six months of 2027.

The deal helps Fox in several ways by adding scale to its already large advertising business and by giving the company a much larger presence in streaming.

That’s likely to be a better long-term bet than overly focusing on legacy television.

However, as analysts at Madison Wall noted, this isn’t a pure integration of a content-advertising business, since Roku also makes hardware.

This introduces risks to deal execution and could make the merging of two different cultures and businesses more difficult. Ultimately, there are many questions, but the deal does seem to position Fox better for the future.

I think investors can take a starter position following the sell-off, but should monitor the company for further evidence that the different parts of each business can work together.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Roku. The Motley Fool has a disclosure policy.