Fox Corp. has agreed to acquire the free, advertiser-supported streaming service Tubi for about $440 million in cash, the companies announced Tuesday.
The deal will give Fox, which owns the Fox broadcast and sports networks along with Fox News and its affiliated properties, a leg up in the ad-supported video-on-demand space, which could serve as a possible growth engine for the broadcaster as audiences move away from linear television.
“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.”
Tubi will continue to be headed up by CEO Farhad Massoudi, and will continue operating as a standalone service.
“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 in a statement. “I am proud of what the team has already accomplished here at Tubi and we couldn’t be more excited about joining such a fast-moving, entrepreneurial company.”
Fox will finance the acquisition of Tubi through the proceeds of a completed sale of its stake in the Roku platform, which was also announced today.
“We were an early investor in Roku and continue to admire the ongoing accomplishments of Anthony Wood and his team,” Murdoch said in a statement. “We are pleased to expand our partnership with them as a result of the Tubi acquisition.”
The deal is expected to close prior to June 30.
Tubi, which was founded in 2014, brings a big audience and a major advertising platform to Fox. The service, which runs unskippable ads on library content that it acquires through licensing deals, said in December it had 25 million monthly active users who watched more than 163 million hours of programming on the service.
As linear viewership continues its downward trend and as the subscription video-on-demand space becomes increasingly competitive, media companies including Comcast and the newly formed ViacomCBS are branching into AVOD streaming platforms. Viacom acquired the ad-supported service Pluto TV for $340 million in January 2019 prior to its merger with CBS. Last month, Comcast bought AVOD service Xumo.
NBCUniversal is reportedly considering acquiring Vudu, a service that offers ad-supported viewing along with the rental or purchase of programming, and is ramping up for the debut of Peacock, a streaming service that will have a limited free ad-supported tier along with a subscription tier.
With Tubi, Fox not only gets a major audience, but an ad platform and recommendation engine that may bolster other streaming endeavors. Tubi manages its own ad server and dynamically inserts advertisements into its programming. The company has also invested considerably in a machine-learning algorithm that recommends content to viewers in an effort to keep them watching programming and ads.
Unlike most SVOD (subscription video-on-demand services) on the market, Tubi does not create original programming, and the company has instead focused its efforts on library content acquisition. The service has more than 56,000 hours of library film and television programming, and most of its viewership is younger-skewing.
Fox sold a swath of its entertainment IP to Disney in a $71.3 billion deal last year, but the broadcaster still maintains a variety of brands through Fox Entertainment, Fox Television Studios, Fox Sports and the Fox News Media properties.