When it was announced last month, Fox Corp.’s proposed $22 billion purchase of Roku was viewed as a regulatory slam dunk by equity analysts including Needham’s Dan Medina, given the “close ties” between the Trump Administration and the Murdoch Family, which controls Fox.
But as the media and entertainment industry is learning that in this highly polarized political environment, there are no easy baskets.
Late last week, U.S. Sen. Elizabeth Warren (D-Mass.) and Rep. Becca Balint (D-Vt.) sent a letter to top antitrust regulators at the U.S. Department of Justice (DoJ), urging them not to “rubber-stamp” Fox’s purchase of Roku.
“If approved, the Fox-Roku merger would combine the country’s two largest free, ad-supported streaming television services. The result would be greater control by Fox-Roku over how viewers watch TV, the device they use to watch, and what programs they watch, meaning fewer choices for viewers and likely higher costs,” the letter states.
The Democratic lawmakers even claimed that combining the two largest free, ad-supported streaming services (known as FASTs) might entice Fox “to start charging for previously free services.”
Warren and Balint also addressed their concerns regarding the DoJ offering what appeared to be quick approval of deals “that may violate antitrust law.”
Bigger antitrust questions
Specifically, they called out the Justice Department’s sign-off on Paramount Global’s $110 billion purchase of Warner Bros. Discovery, which was approved last month. Currently, that merger is being held up by, among other entanglements, a lawsuit filed by 12 state attorneys general, led by California’s Rob Bonta.
A federal judge in Oakland, Calif. overseeing the matter has said she’ll decide by Wednesday whether to place a temporary restraining order on the deal, based on antitrust concerns argued by the plaintiffs. A “yes” could lead to a far more impactful preliminary injunction, which could imperil the whole deal.
There’s recent precedent for such a ruling. Back in March, the DoJ and FCC approved broadcaster Nexstar’s $6.2 billion purchase of rival station group Tegna, even though the resulting constellation of TV stations would vastly usurp Congressional rules on ownership limits.
After Bonta and state AG peers filed suit, however, a Sacramento judge filed a preliminary injunction on the deal. If Nexstar can’t get that ruling overturned on a appeal, it will have to wait until July 2027 to argue its case against the AG’s antitrust concerns.
Notably, San Jose-based Roku is a California company. And like Paramount and WBD, it’s fate would also fall under the jurisdiction of California regulators.
Market share matters
By now, it’s expected that all — or certainly most — mergers will fall under the scrutiny of frequent critic Warren. But it should be noted that, that at least on first glance, she doesn’t seem to be arguing a fringe case, at least where antitrust is concerned..
The Roku Channel and Tubi are, far and away, the two most popular FAST platforms — when combined, they control more than 5% of all U.S. TV viewing, according to Nielsen’s most recent monthly figures.
They also control increasingly vital resources like merchandising visibility — the kind of digital “shelf space” that content and platforms get on TV OS interfaces and other key arbiters of streaming business.
This latest June snapshot from analytics company Looper Insights — which ranks such shelf visibility — is notable.
Besides Amazon Prime Video, no other apps are as visible in the U.S. streaming ecosystem than Fox FAST Tubi and The Roku Channel. Combined, their visibility easily usurps the Amazon Prime Video app.