Key Takeaways
- Fox’s $22 billion Roku deal is reportedly poised to clear Justice Department review under a consent decree, the last regulatory approval it needs.
- Fox’s offer is $96 in cash plus 0.9693 of a Fox share, worth $163.51 at Fox’s Nov. 4 close, the day Roku hit a 52-week high of $163.08.
- Roku had a strong third quarter, and the merger proxy’s standalone valuations ranged from $84.00 to $128.89 a share on peer multiples to $112.68 to $176.99 on discounted cash flow.
- The decree’s terms aren’t known, and the DOJ could still change course before the expected close in the first half of 2027.
Fox (FOXA) is a step closer to owning Roku (ROKU), and Roku’s stock just set a fresh high.
The DOJ is poised to clear Fox’s $22 billion Roku deal under a consent decree, Semafor reported on Nov. 2, citing people familiar with the deliberations. That’s despite pushback from Newsmax majority owner Chris Ruddy, a Trump ally with a long-running dispute with Fox over streaming access for his channels.
Where the Fox-Roku Deal Stands
Each Roku share gets $96 in cash plus 0.9693 of a Fox Class A share at closing, worth $160 when announced in June. Since then:
- Fox and Roku shareholders both approved the deal in October, Roku’s on Oct. 14.
- The DOJ issued a second request in September, opening a deeper review.
- Fox said on its Nov. 2 earnings call that it has every foreign approval it needs, leaving the DOJ as the last gate.
- Both companies still expect to close in the first half of 2027.
A consent decree would let the deal close with conditions attached. Semafor’s sources said the terms are unclear and the DOJ could still change its position.
Roku Already Trades Like a Done Deal
The $96 is fixed, but the rest of the offer moves with Fox’s stock. On Nov. 4, Fox closed at $69.65, which put the offer at $163.51 a share. That’s why Roku could hit $163.08 that day, above June’s $160, and still sit below what the deal pays.
The Street has priced the deal in, too. Analysts’ average target climbed from $111 a year ago to $162 by Oct. 29, just above the $160 the offer was worth in June.
Even the lowest target, $150, sits above the proxy’s peer-multiple range, though it falls inside Qatalyst’s standalone DCF range.
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What Roku Is Worth Without Fox
The business is in good shape. Third-quarter revenue rose 24% to $1.5 billion, net income came in at $183 million, and free cash flow reached $796 million over the trailing 12 months, according to Roku’s shareholder letter. Analysts expect revenue to keep climbing every year through 2028.
The merger proxy’s standalone numbers don’t agree. Qatalyst’s peer-multiple analysis implied $84.00 to $128.89 a share, while its discounted cash flow analysis implied $112.68 to $176.99, and both came before the third-quarter beat. At 48x forward earnings on Nov. 2, Roku looks demanding to me if the deal falls through.
If the deal fails over regulatory approvals, Fox would owe Roku a termination fee of about $1.2 billion, according to Fox’s latest 10-Q. That cushions the business, not the share price.
The Question the DOJ Hasn’t Answered on Roku
Rivals worry Fox could favor its own shows on Roku’s home screen, and The Roku Channel competes head-on with Fox’s Tubi. Lachlan Murdoch has said the two would run separately, with ads sold across both. I’d expect any decree to set rules on exactly those points, and those terms decide what Fox is really buying.
State attorneys general are reportedly looking at the deal, and eight Democratic lawmakers led by Sen. Elizabeth Warren asked the DOJ in July to scrutinize it. Democrats won both chambers of Congress on Nov. 3, and the new Congress sits in January, before the expected close.
The report lowers the odds of a rejection, but it doesn’t remove the downside: Roku still carries the risk of a failed deal and of a drop in Fox’s stock. And there isn’t much left to gain. Roku’s Nov. 4 high of $163.08 sat 43 cents below the $163.51 the offer was worth at Fox’s close that day. Buying now mostly means buying $96 in cash and a slice of Fox, plus the risk of a decree nobody has read.
So What Is Roku Stock Actually Worth if the Deal Doesn’t Go Through?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
