Fox acquires streaming service Tubi for $440 million

Fox Corporation has agreed to acquire ad-supported streaming service Tubi for $440 million in cash.

The acquisition of Tubi is in line with the company's long-term strategic initiatives to broaden and enhance its direct-to-consumer digital reach and engagement, Fox said on Tuesday.

After the sale of 21st Century Fox to Disney for $73 billion in 2019, Fox Corp. still remains a part of Murdoch Family's TV, cable sports and media assets.

Tubi, which is currently available on more than 25 digital platforms in the US, features over 20,000 titles and 56,000 hours of film and episodic television programming from over 250 content partners, including many of the major studios.

FOX plans to continue to run Tubi as an independent service anchored by its robust consumer offering of licensed entertainment content.

ALSO READ: Hotstar rolls back Disney+ for Indian users in less than 24 hours

It plans to expand the Tubi offering not through original content, but rather in a cost-effective manner by leveraging its expertise in national and local news and sports programming.

"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," Lachlan Murdoch, Executive Chairman and Chief Executive Officer of Fox Corporation, 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," Murdoch added.

The combination of Tubi's reach, the resonance of its content and the quality of its technology platform have doubled the service's usage and monetisation over the last 12 months.

Tubi will also seamlessly integrate with and deepen FOX's capabilities in key areas such as digital advertising, direct-to-consumer interfaces and personalisation technology.

ALSO READ: Bob Iger steps aside as Disney CEO, hands off to company insider

Similarly, Tubi will be able to fully leverage FOX's advertising and distribution relationships, as well as its formidable national and local promotional platforms, to further augment the service's growth trajectory.

"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," Tubi Founder and CEO Farhad Massoudi, who will continue to head Tubi, added.

Fox will finance the Tubi acquisition principally with the net proceeds from the completed sale of its stake in Roku, Inc. ("Roku").

In doing so, FOX preserves its balance sheet capacity by essentially exchanging a passively held minority investment for full ownership and control of a leadership position in the free ad-supported streaming market.

The Tubi transaction, which is subject to regulatory approvals and the satisfaction or waiver of customary closing conditions, is expected to close before June 30, 2020.