Fox Corporation has agreed to acquire the advertiser-supported online video service Tubi for $440 million in cash and up to $50 million in deferred payments. The purchase will be funded though the proceeds of selling its stake in Roku. Fox aims to extend its direct-to-consumer reach and engagement. In so doing it will be competing with the likes of Pluto TV, now owned by ViacomCBS, or Xumu, which was acquired by Comcast.
Fox Corporation comprises Fox Broadcasting and local television stations, Fox News and Fox Business, and Fox Sports, following the sale of most of the 20th Century Fox assets to Disney in 2019.
Tubi, which is currently available on more than 25 digital platforms in the United States, 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. It has a relatively young user base that spends over 160 million hours a month watching the service. It claims an active user base of 25 million.
Fox plans to continue to run Tubi as an independent service. Fox will evaluate opportunities to expand the Tubi offering with its national and local news and sports programming.
“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,” said Lachlan Murdoch, the executive chairman and chief executive of Fox Corporation. “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 chief executive 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 from the sale of its 5% stake in Roku, Inc, in which it was an early investor. It says that rather than a passively held minority investment it will gain full ownership and control of a leadership position in the free ad-supported streaming market.
In January 2019, Viacom acquired Pluto TV for $340 million. That service claims more than 22 million monthly users.
In February 2020, Comcast acquired Xumo, reportedly for over $100 million.