$FOX dropped 25% buying $ROKU. Is the market wrong? | Simeon McMillan, Accrued Interest

YAVP #403

The market has decided Fox ($FOXA) blundered by paying $22 billion for Roku ($ROKU), and it has cut Fox roughly 25% in the two weeks since the deal was announced. Simeon McMillan of Accrued Interest thinks the market is wrong (see his write up here). His case: Roku controls about 44% of how Americans reach streaming on the big screen, roughly 3x the next platform, so Fox just bought the front door to streaming and around 100 million connected TVs, and below the surface the deal is closer to 16-17x free cash flow once you give Roku credit for its barely-tapped ad levers and a few synergies. We get into the Roku homepage as the new "Netflix homepage," why Fox keeps making the smartest M&A bets in media, the Tubi sleeper Simeon is most bullish on, why he loves Roku but is bearish on Spotify, and why Google and Meta look like "true value stocks" to him. I push back hard on whether Fox plus Roku is really better than Roku staying neutral Switzerland for every bidder.

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