Part 1 (above) made the strategic case for why Fox bought Roku. Part 2 goes under the hood 👉 Roku is the chokepoint of US streaming — ~44% of connected-TV viewing flows through it — and for a decade it barely charged a toll. 🚦
I break down the 3 monetization levers Roku is finally pulling, the data asset I think helps justify the $22B price tag, and the Q1 numbers showing the payoff is just getting started (Platform +28%, EBITDA +165% 📈).
Interesting read and completely the opposite of my first gut reaction.
My thinking was that "Old legacy player buying the newer digital upstart" never works, because they either 1) massively overpay or 2) completely mismanage the new digital business.
Considering the growth, the Roku price seems reasonable. Do you think Murdoch's will manage Roku well?
Ray — thanks as always for reading and sharing, I really appreciate you engaging with the work 🙏
Your gut reaction is the correct default skepticism. 💯 The "old legacy player buys the shiny new digital upstart" trade has an absolutely brutal track record. 💀 Time Warner / AOL. AT&T / DirecTV. Even the Disney / Fox deal we just talked about hasn't worked out the way Iger pitched it. The base rate is bad, and you're right to start there.
But I think this one is different, and the reason comes back to the Murdochs themselves. 🦊 One of the things I'm actively trying to do with Accrued Interest is focus my research on the variant perceptions I have highest conviction in 🎯 — and this is the first of several upcoming pieces where I want to explain to readers just how undervalued and underestimated Roku is. The Murdochs are part of that thesis.
As I argued in the piece, the Murdochs have quietly been the smartest capital allocators in legacy media for the better part of a decade. 📈 The 2019 sale to Disney was an incredibly forward-thinking, strategic exit from the linear television business — and they sold at the absolute peak of the bubble. 🔔 That kind of timing is not luck. That's pattern recognition that most legacy media boards simply do not have. 🧠
I also have a hypothesis that I want to flag here, because I think it's underappreciated 🌍: both Fox and Roku are primarily U.S.-centric brands. International investors don't follow Fox the way they follow Disney or Netflix, and I think a meaningful chunk of the market is genuinely not grasping how well-run Fox Corporation actually is. 🇺🇸 That's part of the mispricing.
And here's the piece I'm most excited to write about in the coming weeks 🔥 — there is substantial evidence that Roku's management team was under-monetizing its ad platform. 💰 The home screen real estate is some of the most valuable digital inventory in America, and Roku has historically left money on the table relative to what a more ad-savvy operator (read: Fox) could extract. So part of my upside thesis on the combined entity is actually that Roku was not being managed as well as it could have been — and Fox is going to fix that. 🛠️
To directly answer your question: yes ✅, I think the Murdochs will manage Roku well. More importantly, I think they'll monetize it better than the standalone team ever did.
Thanks for writing this in a decently timed manner! Helpful framing. A couple of Qs I’m still grappling with as a guy whose followed Roku for a long time:
Curious how should ROKU holders think about striking this kind of partnership at a ~$160 valuation vs prior highs (recall it was >$400) given I know you are "outperform" on it - does feel like somewhat of a betrayal esp since the next 1-2 year FCF trajectory was supposedly looking so +ve (unless there was something -ve going on in the back end, eg losing PSKY+WBD channels perhaps)?
On FOXA, given its heavy legacy TV exposure (say revs/EBITDA are still majority "old school" linear), what gives you confidence this is a true “pivot” vs more of a defensive distribution extension? I think if you add ROKU+FOXA, the EBITDA is like FY27 for $5B+ (incl cost synergies) then on current EV of say ~$43B (just take FOXA share price + new share count of say ~580m, then adj for the net debt + NCI), it looks like near ~9x EV/EBITDA? Does that feel punchy for what is majority still that "old school" exposure?
Mike — thanks so much for engaging and for the thoughtful questions 🙏 These are exactly the right things to be grappling with, and the fact that you've followed Roku for a long time means you're asking from a place of real context. Let me take both in turn 👇
On Question 1 — the "selling at $160 vs prior $400+ highs" angle: 📉
I genuinely get the frustration here. From a long-time Roku shareholder's perspective, it's very fair to feel like you're giving up some upside by selling now, just as the operating metrics were starting to inflect in the right direction. The Q1 platform revenue acceleration and the EBITDA inflection were real, and the next 1–2 years of FCF were setting up nicely on a standalone basis.
But here's how I'd reframe it: 🔄 at the end of the day, Roku is meaningfully better off with this partnership than without it. A major legacy media partner like Fox gives Roku access to a lot of high-value content and ad relationships that they would have had to share the economics on, or potentially been locked out of entirely — as a standalone player.
And here's the variant perception I'm going to develop in upcoming pieces 🎯: I think Roku was actually under-managed and under-monetized as a standalone company. The recent operating performance...the EBITDA inflection you're referencing, is largely a story of Roku finally getting its house in order, not a story of them firing on all cylinders. There was, and still is, a lot of money being left on the table. 💰
Fox is one of the few partners who can fix that. They're a Big 4 broadcast network with the most dominant news franchise in cable and access to premium live sports rights — the two verticals that advertisers most want exposure to. 🏈 📺 Plugging Roku's distribution into Fox's ad sales machine is, in my view, going to grow the platform meaningfully faster than the standalone path would have. So I see this less as "Roku selling at the bottom" and more as "Roku finding the one partner who can actually unlock the next leg of the story."
On Question 2 — pivot vs. defensive distribution extension and the ~9x multiple: 🧮
This is the sharper of the two questions, and I respect the math. You're right that the pro forma EBITDA on FY27 (including synergies) gets you into the $5B+ range, and the EV math you're describing puts it around ~9x, so that's fair framing.
Here's where I land differently though: I'd push back gently on the "defensive distribution extension" framing. ⚔️ I think this is actually a deal where the best defense is a good offense — and there are real, observable signals that Fox is playing offense.
Two examples I'm going to develop in upcoming pieces 🔥:
🏆 First, Roku had already cut a deal with The CW (owned by Nexstar) where Roku effectively became the streaming partner for The CW's entertainment programming — so The CW didn't have to build and manage its own streaming infrastructure. That kind of arrangement is the opposite of defensive. It's Roku positioning itself as the connective tissue between content owners and audiences.
🏟️ Second, and more importantly, Fox just put the Super Bowl on Tubi this past February — the first time the Super Bowl has ever aired on an ad-supported streaming service. That was an aggressive, forward-leaning move that signaled exactly how Fox is thinking about the future of premium content distribution.
So on the ~9x multiple: I genuinely think that's a very fair price for what this NewCo is going to be — a major gatekeeper for streaming television for years to come. 🚪 The "old school" exposure you're flagging is real, but Fox News and Fox Sports are arguably the two most defensible assets in all of legacy media, and pairing them with the #1 CTV operating system is the most relevant combination in television today.
To directly answer your question: ✅ no, I don't think ~9x is punchy. I think it's reasonable, and I think the market will revalue it higher as the synergies prove out.
This piece is going to be the first in a series where I dig into Roku's monetization gap, the strategic logic of the combined entity, and where I think the stock can go. 📈 Mike, sincerely — thank you for the support and for sharing the work. Conversations like this one are exactly why I write 🙏
Part 2 is live of my Roku deep dive series! 🚢
Part 1 (above) made the strategic case for why Fox bought Roku. Part 2 goes under the hood 👉 Roku is the chokepoint of US streaming — ~44% of connected-TV viewing flows through it — and for a decade it barely charged a toll. 🚦
I break down the 3 monetization levers Roku is finally pulling, the data asset I think helps justify the $22B price tag, and the Q1 numbers showing the payoff is just getting started (Platform +28%, EBITDA +165% 📈).
Give it a read 👇 https://www.accruedint.com/p/the-strait-of-roku-how-fox-seized
Interesting read and completely the opposite of my first gut reaction.
My thinking was that "Old legacy player buying the newer digital upstart" never works, because they either 1) massively overpay or 2) completely mismanage the new digital business.
Considering the growth, the Roku price seems reasonable. Do you think Murdoch's will manage Roku well?
Ray — thanks as always for reading and sharing, I really appreciate you engaging with the work 🙏
Your gut reaction is the correct default skepticism. 💯 The "old legacy player buys the shiny new digital upstart" trade has an absolutely brutal track record. 💀 Time Warner / AOL. AT&T / DirecTV. Even the Disney / Fox deal we just talked about hasn't worked out the way Iger pitched it. The base rate is bad, and you're right to start there.
But I think this one is different, and the reason comes back to the Murdochs themselves. 🦊 One of the things I'm actively trying to do with Accrued Interest is focus my research on the variant perceptions I have highest conviction in 🎯 — and this is the first of several upcoming pieces where I want to explain to readers just how undervalued and underestimated Roku is. The Murdochs are part of that thesis.
As I argued in the piece, the Murdochs have quietly been the smartest capital allocators in legacy media for the better part of a decade. 📈 The 2019 sale to Disney was an incredibly forward-thinking, strategic exit from the linear television business — and they sold at the absolute peak of the bubble. 🔔 That kind of timing is not luck. That's pattern recognition that most legacy media boards simply do not have. 🧠
I also have a hypothesis that I want to flag here, because I think it's underappreciated 🌍: both Fox and Roku are primarily U.S.-centric brands. International investors don't follow Fox the way they follow Disney or Netflix, and I think a meaningful chunk of the market is genuinely not grasping how well-run Fox Corporation actually is. 🇺🇸 That's part of the mispricing.
And here's the piece I'm most excited to write about in the coming weeks 🔥 — there is substantial evidence that Roku's management team was under-monetizing its ad platform. 💰 The home screen real estate is some of the most valuable digital inventory in America, and Roku has historically left money on the table relative to what a more ad-savvy operator (read: Fox) could extract. So part of my upside thesis on the combined entity is actually that Roku was not being managed as well as it could have been — and Fox is going to fix that. 🛠️
To directly answer your question: yes ✅, I think the Murdochs will manage Roku well. More importantly, I think they'll monetize it better than the standalone team ever did.
More to come on all of this — stay tuned 👀
Thanks for writing this in a decently timed manner! Helpful framing. A couple of Qs I’m still grappling with as a guy whose followed Roku for a long time:
Curious how should ROKU holders think about striking this kind of partnership at a ~$160 valuation vs prior highs (recall it was >$400) given I know you are "outperform" on it - does feel like somewhat of a betrayal esp since the next 1-2 year FCF trajectory was supposedly looking so +ve (unless there was something -ve going on in the back end, eg losing PSKY+WBD channels perhaps)?
On FOXA, given its heavy legacy TV exposure (say revs/EBITDA are still majority "old school" linear), what gives you confidence this is a true “pivot” vs more of a defensive distribution extension? I think if you add ROKU+FOXA, the EBITDA is like FY27 for $5B+ (incl cost synergies) then on current EV of say ~$43B (just take FOXA share price + new share count of say ~580m, then adj for the net debt + NCI), it looks like near ~9x EV/EBITDA? Does that feel punchy for what is majority still that "old school" exposure?
Jut my 2c :)
Mike — thanks so much for engaging and for the thoughtful questions 🙏 These are exactly the right things to be grappling with, and the fact that you've followed Roku for a long time means you're asking from a place of real context. Let me take both in turn 👇
On Question 1 — the "selling at $160 vs prior $400+ highs" angle: 📉
I genuinely get the frustration here. From a long-time Roku shareholder's perspective, it's very fair to feel like you're giving up some upside by selling now, just as the operating metrics were starting to inflect in the right direction. The Q1 platform revenue acceleration and the EBITDA inflection were real, and the next 1–2 years of FCF were setting up nicely on a standalone basis.
But here's how I'd reframe it: 🔄 at the end of the day, Roku is meaningfully better off with this partnership than without it. A major legacy media partner like Fox gives Roku access to a lot of high-value content and ad relationships that they would have had to share the economics on, or potentially been locked out of entirely — as a standalone player.
And here's the variant perception I'm going to develop in upcoming pieces 🎯: I think Roku was actually under-managed and under-monetized as a standalone company. The recent operating performance...the EBITDA inflection you're referencing, is largely a story of Roku finally getting its house in order, not a story of them firing on all cylinders. There was, and still is, a lot of money being left on the table. 💰
Fox is one of the few partners who can fix that. They're a Big 4 broadcast network with the most dominant news franchise in cable and access to premium live sports rights — the two verticals that advertisers most want exposure to. 🏈 📺 Plugging Roku's distribution into Fox's ad sales machine is, in my view, going to grow the platform meaningfully faster than the standalone path would have. So I see this less as "Roku selling at the bottom" and more as "Roku finding the one partner who can actually unlock the next leg of the story."
On Question 2 — pivot vs. defensive distribution extension and the ~9x multiple: 🧮
This is the sharper of the two questions, and I respect the math. You're right that the pro forma EBITDA on FY27 (including synergies) gets you into the $5B+ range, and the EV math you're describing puts it around ~9x, so that's fair framing.
Here's where I land differently though: I'd push back gently on the "defensive distribution extension" framing. ⚔️ I think this is actually a deal where the best defense is a good offense — and there are real, observable signals that Fox is playing offense.
Two examples I'm going to develop in upcoming pieces 🔥:
🏆 First, Roku had already cut a deal with The CW (owned by Nexstar) where Roku effectively became the streaming partner for The CW's entertainment programming — so The CW didn't have to build and manage its own streaming infrastructure. That kind of arrangement is the opposite of defensive. It's Roku positioning itself as the connective tissue between content owners and audiences.
🏟️ Second, and more importantly, Fox just put the Super Bowl on Tubi this past February — the first time the Super Bowl has ever aired on an ad-supported streaming service. That was an aggressive, forward-leaning move that signaled exactly how Fox is thinking about the future of premium content distribution.
So on the ~9x multiple: I genuinely think that's a very fair price for what this NewCo is going to be — a major gatekeeper for streaming television for years to come. 🚪 The "old school" exposure you're flagging is real, but Fox News and Fox Sports are arguably the two most defensible assets in all of legacy media, and pairing them with the #1 CTV operating system is the most relevant combination in television today.
To directly answer your question: ✅ no, I don't think ~9x is punchy. I think it's reasonable, and I think the market will revalue it higher as the synergies prove out.
This piece is going to be the first in a series where I dig into Roku's monetization gap, the strategic logic of the combined entity, and where I think the stock can go. 📈 Mike, sincerely — thank you for the support and for sharing the work. Conversations like this one are exactly why I write 🙏
More to come — stay tuned 👀
- Accrued Interest