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The U.S. Department of Justice (DOJ) is expanding its antitrust investigation into Fox’s proposed $22bn acquisition of streaming platform Roku, according to a report by Semafor citing people familiar with the matter.
The reported move comes only months after Fox announced the $160-per-share transaction, which would combine its broadcasting and sports operations with Roku’s streaming platform and create one of the largest players in the television viewing market.
Roku shares fell about 2 per cent in extended trading following the report, reflecting investor concerns over the potential regulatory hurdles facing the proposed transaction.
DOJ seeks additional information from Fox and Roku
According to Semafor, the DOJ plans to issue what is known as a “second request” to both companies.
The process would require Fox and Roku to provide additional data, documents and other information to support the regulator’s review of the transaction.
A second request typically signals that regulators require more detailed information before determining whether a major transaction could raise competition concerns.
Reuters said it could not immediately independently verify the report. The DOJ, Fox and Roku also did not immediately respond to requests for comment outside business hours.
Fox sees Roku as a route to larger digital audience
Fox announced in June that it would acquire Roku through a combination of cash and stock, positioning the deal as a way to strengthen its advertising business and expand the reach of its sports and news content.
The transaction would give Fox access to more than 100 million households using Roku’s platform, providing the cable television-focused company with a significantly larger digital distribution network.
For Fox, the acquisition is intended to accelerate its transition towards a broader digital audience while reducing its dependence on traditional television distribution channels.
Under the proposed agreement, Roku shareholders would receive $96 in cash and approximately 0.97 Fox Class A shares for each Roku share held, placing the value of the offer at $160 per share.
Proposed merger would reshape US streaming competition
The combination would bring together Fox’s broadcasting and sports assets with Roku’s established position in streaming.
The companies expect the enlarged business to become the third-largest player in television viewing, behind YouTube and Disney and ahead of Netflix.
That scale could increase the regulatory significance of the transaction as authorities examine how the combined company would compete across television, streaming, advertising and digital content distribution.
The DOJ’s reported decision to seek additional information therefore introduces another layer of uncertainty for the proposed acquisition as Fox and Roku work through the regulatory review process.
Antitrust scrutiny becomes key test for deal
The regulatory review could determine how quickly the transaction can progress and whether additional conditions are required before it can be completed.
Fox CEO Lachlan Murdoch had previously downplayed concerns about potential conflicts arising from the combination.
However, the reported expansion of the DOJ inquiry highlights the level of scrutiny facing the deal as regulators assess its potential impact on competition in the rapidly evolving television and streaming market.
The outcome will be closely watched by investors and the wider media industry as traditional broadcasters increasingly seek digital platforms to expand their audiences and compete for advertising revenue.
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