Fox Corp., the parent company of Fox, FS1, Fox News, and Fox Business has acquired the free on-demand streaming service, Tubi. The deal is for $440 million in net cash consideration, with additional deferred compensation that could total $50 million, according to the company.
The service claims over 20,000 titles, almost four-times the library of Netflix. Tubi Founder and CEO Farhad Massoudi, who will continue to head Tubi, which will remain an independent service.
“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. 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,” said Chief Executive Officer of Fox Corporation, Lachlan Murdoch.
The deal is now largest acquisition of the free ad-supported streaming services. In January 2019, Viacom acquired Pluto TV for $340 million. Sony sold their free streaming service Crackle to Chicken Soup For the Soul Entertainment, who subsequently rebranded it Crackle Plus. In February, Comcast acquired free streaming service Xumo, which offer on-demand and synthetic linear channels, for a rumored $100 million.
Fox hopes to use Tubi to “deepen FOX’s capabilities in key areas such as digital advertising, direct-to-consumer interfaces and personalization technology.” Tubi hopes to use Fox’s advertising and distribution relationships, as well as their national and local promotional platforms.
To finance the deal, FOX has completed a sale of their stake in Roku, in which they were an early investor. The company expects the transaction to close in late-June.
Tubi, which unlike Pluto TV and Xumo, does not offer linear channels, but instead offers free on-demand movies and TV shows. The company was reportedly looking to raise $150 million in a funding round late last year.
The service is the biggest of the free ad-supported streaming services with 25 million users and 163 million hours watched. In comparison, Pluto TV, announced they have 22 million users, with the hopes of reaching 30 million by the end of 2020. Crackle Plus reportedly has an audience of ~10 million active users. Last April, Xumo surpassed 5.5 million monthly actives, but has recently partnered with Redbox to white-label their streaming service.
Tubi has also expanded internationally — launching in Canada and Australia, with Mexico and UK coming later this year. The service also launched a kids vertical with the over 5,000 hours of content — with movies like How to Train Your Dragon and series like Sonic the Hedgehog, Strawberry Shortcake, Paddington Bear, and The Wiggles.