When a Roku customer turns on their TV today, hours after Fox acquired the company for $22B, they’ll see some familiar sights: a large box promoting Rachel Bilson-led drama Hart of Dixie, which now streams on Pluto TV, and tiles promoting new seasons of Euphoria and Love Island USA.

In future, one might see more Fox stars in those spaces.

On its surface, the deal will not cause an immediate shift in Fox’s programming strategy for either its broadcast network or its free streaming service Tubi, but inside the Rupert Murdoch-owned company, executives are excited that it will be a major boon for its overall business.

The move is, on one level, a rather unsexy one: Fox Corporation is buying an operating system. However, the deal has been hailed by one source as the “biggest TV deal of the year”, given that Roku surpassed 100M streaming households in April giving Fox a much bigger “front door” into the world of streaming than it previously had.

This will bring plenty of benefits for the TV side of the business, led by Fox Entertainment CEO Rob Wade, including potentially increased promotion for its dramas and comedies such as Doc and Animal Control, animated series such as The Simpsons and Family Guy, and its plethora of unscripted titles such as Rob Lowe’s The Floor and The Masked Singer.

It could also help the company’s nascent international TV distribution division Fox Entertainment Global, which is on an acquisition drive, and its recently launched Creator Studios unit, the Billy Parks-led digital–first division that will see its new formats, IP and talent having more opportunities with Roku in the fold.

One interesting reunion that is likely is the return of Roku Media President Charlie Collier into the Fox fold. Collier was previously head of entertainment at Fox before joining Roku in 2022. He was responsible for launching Gordon Ramsay’s Studio Ramsay Global and acquiring Bob’s Burgers producer Bento Box Entertainment and Marvista Entertainment, which ostensibly became the driver for Fox Entertainment Studios. Ironically, Deadline understands that one of the reasons that Collier left was the fact that he wasn’t given oversight of Tubi, which Fox acquired in 2020.

A Digital-First Deal

Instead of acquiring or launching a streaming service, Fox has gone one bigger, making the company, once the deal closes next year, a much more digital one than it is today.

This will give Fox executives access to incredible amounts of data on its own shows and others’ titles that it can use from a programming perspective, as well as an advertising one. Consultancy Madison & Wall estimates that it would mean Fox receives around 14% of all spending on U.S. television with $9B of advertising revenue.

There’s a reasonable expectation that Fox will be able to use the major real estate on the front page of Roku to promote its shows like The Floor or Best Medicine or highlight Fox News and Fox One. But insiders also noted that those promotional areas are hugely valuable to third parties. For instance, Apple and Hulu shows including Drops of God and The Testaments are currently in rotation, some of which are paid and some of which are shown thanks to the Roku algorithm. Traditional advertisers also pay to advertise in those spots.

“That home screen is massively powerful,” one source close to Roku told Deadline. “That’s the first thing that you see when you turn on your TVs, which is why the likes of Disney and Peacock will invest in buying inventory on the home screen.”

One of the other major focuses is on how The Roku Channel and Tubi will sit alongside each other. Fox CEO Lachlan Murdoch called them “incredibly complementary services” on its investor call after the deal, but he warned that the expectation is that they will be kept separate. “They serve consumers and our viewers in different ways,” he said.

Subscriptions are another important business line for Roku. The company and Fox recently reached a distribution deal for the Fox One flagship streamer, which is currently on a World Cup drive. Roku offers dozens of other outlets via its subscription hub, reducing friction for customers and simplifying payments as do larger tech rivals like Amazon and Google.

Some industry sources believe there will inevitably be a merger of The Roku Channel and Tubi, which is overseen by Anjali Sud, at some stage.

The Roku Channel had a 3% share of streaming viewing in March, per Nielsen’s The Gauge, and Tubi had a 2.2% share so if they were combined they would be in line with Disney’s 5.3% share.

In terms of monthly TV viewing by distributor, the deal would have given Fox a 10.2% share of viewing in March, ahead of Netflix and NBCUniversal (which also counts Versant), and just below YouTube and Disney.

The Roku Channel does commission original programming with some of its bigger titles including Weird: The Al Yankovic Story, The Great American Baking Show and Jessica Alba’s Honest Renovations, which is heading into its fourth season. Newer titles include The Reunion: Laguna Beach and Solo Traveling with Tracee Ellis Ross, which has been renewed for a second season.

However, this strategy, led by Head of Originals Brian Tannenbaum, is a relatively small part of Roku’s overall business and is unlikely to change drastically.

While Fox executives might be popping champagne corks, there is considerable doubt on Wall Street about the combination. Fox shares plunged 15% on the news, which is a larger-than-normal dive for the company making an acquisition. Roku stock, which jumped late Friday on word of a potential deal, dipped 2%.

Doug Creutz, a veteran media analyst with T.D. Cowen, expressed reservations in a note to clients. Tubi has posted strong revenue growth, he noted. “But the broader history of the industry suggests skepticism,” he wrote. Combining distribution with content has failed plenty of times before, notably with the AOL Time Warner debacle or Time Warner’s equally ill-fated marriage with AT&T.

While Creutz concedes those mergers are “ancient history at this point, history has a strong tendency to repeat, or at least rhyme.”