US Broadcasting: We Like Fox + Roku. Moving Fox to our Top Pick

Research evidence excerpt

US Broadcasting: We Like Fox + Roku. Moving Fox to our Top Pick

Action |

16 Jul 2026 21:00:21 ET │ 20 pages

US Broadcasting

We Like Fox + Roku. Moving Fox to our Top Pick

CITI'S TAKE

Jason B Bazinet AC

We believe weakness in Fox following the Roku announcement is overdone. +1-212-816-6395

We expect ~$1 billion in annual EBITDA from both revenue and cost jason.bazinet@citi.com

synergies. This suggests the deal may be FCF accretive one year after closing

(vs Fox’s guide of two years). We also expect the deal to close as soon as Aarushi Gupta

4Q26 (vs Fox’s outlook for 1H27). As such, we are moving Fox to our Top Pick +1212-816-1136

and maintaining our $78 price target. aarushi.gupta@citi.com

Michael LehmanDeal Announcement — On June 15, Fox announced it acquired Roku. Fox suggests

the transaction should close in 1H27. The consideration: 60% cash ($96 per share) +1-212-816-9300

and 40% stock (0.969 FOXA shares per ROKU share). With a 33% premium and michael.lehman@citi.com

$400 million of cost savings, most investors agree Fox should have fallen just ~10%.

Weakness in Fox Overblown — Fox’s share price dropped more than 10%. We

suspect the weakness was driven by: 1) growth and value investors often have

divergent interests; 2) investor uncertainty on synergies; and 3) fundamental

investors reluctance to buy Fox prior to close. However, we could see: 1) significant

cost and revenue synergies; 2) multiple expansion as Fox's pro-forma growth rate

improves; and 3) a rapid close (perhaps as early as 4Q26 or early 1Q27).

Significant Synergy Potential — We expect revenue synergies from: 1) Fox's

salesforce improving Roku's fill rates, potentially adding ~$325 million in annual

EBITDA and 2) Use of Roku's platform to drive FOX One subscriptions, adding