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Fox Decision to Buy Tubi Cost Them Over $2 Billion

Jason Gurwin

You know the story of the guy who sold 10,000 Bitcoins for two Papa John’s pizza in 2010? Those two pizzas are now worth over $300 million. This might be worse.

In March, Fox acquired Tubi for $440 million, the free ad-supported streaming service. On the surface, the deal seems like a home run. Tubi continues to grow and reached 33 million active users (+100% year-over-year) and had 220 million total hours viewed per month as of their last report. It was how Fox financed the deal which has made it an extremely expensive decision.

In order to purchase the company, they sold off their 6 million shares of Roku stock (~5% of the company) for a reported $350 million. But, the timing of the sale couldn’t have been worse. At the time, the market had its largest single day drop since 1987, that saw Roku’s stock near $60 a share.

However, since then – Roku has been on a tear. The stock closed yesterday at an all-time high of $428.50 a share. At that price, Fox’s position would have been worth over $2.5 billion. Hind-set is of course 20/20 – or in this case 2020. No one knew exactly what the world would look like in the midst of a raging global pandemic.

Fox has continued to invest in Tubi. They have added some of their primetime programming, like “The Masked Singer”, to the free service after it airs on linear TV. They have also added live linear streams of their owned-and-operated local news networks to the service. Earlier this week, they revealed that the service had 2.5 billion hours streamed on the platform (+58% year-over-year).

But, one has to wonder – would they have been better keeping their stake and just helping grow “The Roku Channel” instead? Or, at least finding another way to finance the deal? Fortunately for Fox though, at least they still have Tubi. The Bitcoin guy, those pizzas are long gone.

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