Netflix (NASDAQ: NFLX) saw its stock price fall by nearly 4% on Tuesday, reportedly due to two key factors: Fox Corporation’s agreement to acquire Roku and a media report suggesting Netflix’s own attempt to purchase Roku was unsuccessful.
Fox Acquires Roku
Fox Corporation, a legacy media and entertainment company, announced before market open on Monday its agreement to acquire video streaming company Roku in a deal valued at $22 billion. This transaction, which is a mix of cash and stock, has received approval from the boards of directors of both companies and is expected to be finalized in the first half of next year.
Netflix’s Unsuccessful Bid
Adding to the pressure on Netflix’s stock, a report from news site Semafor on Tuesday indicated that Netflix had also pursued Roku but was rebuffed. The report cited unidentified sources involved in the sale process, stating that while the exact amount of Netflix’s bid was not clear, one source suggested it was below the $160-per-share price offered by Fox. Netflix has not issued an official statement regarding this report.
Market Dominance Concerns
While the acquisition of a complementary asset like Roku could offer strategic advantages, a potential deal for Netflix might have faced significant regulatory hurdles. As a dominant player in video streaming, Netflix could have encountered concerns about market dominance, making regulatory approval more challenging compared to Fox’s acquisition. Some analysts suggest that even if Netflix had pursued Roku, the potential capital expenditure might be a relief for shareholders given the potential complexities.
Other Potential Ventures
The Semafor report also mentioned that Netflix is reportedly considering a potential acquisition of TV and film studio Lionsgate. However, Netflix later denied this possibility.
Helene Elliott is the senior reporter for News Raise. She covers Science news. She also has a keen interest in photojournalism. Helene holds a nomination for the prestigious Red Smith Award. She is married to author Dennis D’Agostino, a former publicist with the New York Mets.
