If there’s a Roku stick behind your TV, Fox Corp. is about to own a piece of your living room. Roku sits in roughly half of all U.S. broadband households, according to Bank of America.
That reach is exactly what Fox has been missing. The company has thrived on live football and cable news, but those still mostly reach you through a shrinking cable bundle.
Fox Corp. (FOXA) agreed in June to buy Roku for $160 a share, valuing the streaming platform at about $22 billion, Variety reported. Fox already generated $17.13 billion in revenue in fiscal 2026, according to TheWrap, helped by the World Cup and a record quarter at its free streaming service, Tubi.
“This transaction will bolster our position in connected TV distribution and advertising,” Fox CEO Lachlan Murdoch said on the company’s Aug. 6 fiscal fourth-quarter earnings call.
Still, Wall Street was split on whether Fox overpaid. One of its biggest skeptics just changed its mind.
According to a Bank of America research report dated Oct. 16 and reviewed by TheStreet, the Roku deal “fundamentally changes the strategic and financial narrative” for Fox, and the bank now sees more than 30% upside in the stock.
Why Bank of America flipped from bear to buyer
BofA had rated Fox Underperform since February. Its worry was that the NFL would push for an early, far pricier TV rights deal, and that Fox had no real streaming answer as more viewers cut the cord.
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Both concerns have eased. Murdoch said on the August earnings call that Fox doesn’t expect changes to its NFL terms “until the 2030 season,” and the Roku deal hands Fox a ready-made streaming platform.
“Roku addresses this existential question,” wrote BofA analyst Jessica Reif Ehrlich in the note, titled “One billion reasons to love the Roku deal; upgrade Fox to Buy.” She raised her price target to $85 from $54.
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That target sits above the $82 JPMorgan set when it upgraded the stock on Aug. 14, Finviz reported. Fox shares closed at $62.21 on Oct. 16, below the $68.14 they traded at before the bell on the day of that JPMorgan upgrade.
Here’s the deal math for Roku shareholders. Each Roku share gets $96 in cash plus 0.9693 Fox shares, so at Fox’s current price the package is worth about $156 per share, a bit under the $160 headline, by my math.
What the deal could mean for your Roku screen
For viewers, the biggest change is likely to be ads. BofA estimates Roku sells only about 36% of its available video ad slots, compared with likely more than 60% at Fox’s Tubi.
Each one-point gain in that fill rate is worth about $80 million in revenue, the bank calculated. In plain terms, Fox makes more money when more of those empty ad breaks on The Roku Channel get filled.
BofA laid out in its research note where it sees the extra revenue coming from:
- About $310 million from selling more Roku video ads, partly by bundling them with scarce Fox inventory such as NFL games.
- Roughly $150 million from bundling Fox One, Fox’s streaming service, into Roku subscriptions, assuming one million new subscribers at a lower price.
- About $75 million from home-screen advertising, including sports hubs such as Roku’s NFL Zone.
That bundling piece could matter for your monthly bill. If Fox One shows up as a discounted add-on through Roku, you might pay less than buying it on its own, though BofA’s numbers assume Fox earns less per subscriber, too.
Given that backdrop, it’s easy to see why Reif Ehrlich thinks the market is underrating the deal. She called her $530 million revenue estimate a base case and put her bull case above $1 billion, which gives the note its title.
The NFL bill and a Walmart problem still loom
The NFL hasn’t gone away. Notwithstanding Murdoch’s apparent confidence during the earnings call that there would be no new deal before 2030, BofA estimates that a renewal at 1.5 times today’s annual fee before the 2027 season would cut Fox’s fiscal 2028 earnings before interest, taxes, depreciation and amortization by about 15%.
That’s less painful than the roughly 22% hit the bank modeled in February. Roku’s extra cash flow, which BofA puts at about $1 billion in 2027, gives Fox more room to absorb a bigger check.
Much will likely depend, however, on Walmart. The retailer now owns TV manufacturer Vizio, whose TVs come equipped for streaming. BofA notes that Roku’s largest distributor, which is presumably Walmart, fell from more than 40% of Roku sales in 2023 to nearly 20% in 2025.
BofA even titled its risk section “Walmart looms as a Death Star.” I’d also note the bank itself questions why Roku agreed to sell if its prospects were so bright.
For your portfolio, Fox is a modest income stock, with a dividend yield of about 0.9%, or roughly $90 a year on a $10,000 stake. The real payoff depends on whether Fox can turn Roku’s reach into ad dollars.
Reif Ehrlich thinks it can. “Ultimately, we believe the stock now offers an attractive setup,” she wrote.
