One Simple Reason Why Fox Needs Roku

THERE IS A GREAT NUMBER of ancillary reasons why the Fox Corporation dropped $22 billion to purchase Roku, the maker of set-top boxes and television operating systems through which an enormous amount of streaming traffic flows. But all of them come back to two charts in the last two annual reports to Fox investors.

Here’s the estimated number of subscribers to various Fox cable networks from 2023 to 2024:

And here’s the estimated number of subscribers to those networks from 2024 to 2025:

As you can see, the only word to describe the declines here is “precipitous.” Fox News Channel—which is, alongside ESPN and CNN, among the most ubiquitous cable channels—has declined from 72 million subscribers in 2023 to 61 million subscribers by 2025. Fox Business, from 70 million to 60 million. The sports networks have seen similar, albeit less dramatic, declines.

Now, none of this is new knowledge and nothing here is unique to Fox. People are not unsubscribing from Fox News in protest; indeed, Fox’s ratings compare pretty well even to broadcast TV. Cable packages are, simply, in terminal decline as more and more consumers of television opt for rotating streaming subscriptions and free services like YouTube and Tubi. (More on that last one in a moment.) But it will eventually be an enormous problem for Fox, given how much revenue the company generates from “affiliate fees,” the per-subscriber (around $2) charge Fox earns monthly.¹ (Indeed, Fox generates more revenue from affiliate fees than advertising, by far.)

Of all the legacy networks, Fox is in the worst shape in the streaming world. Despite launching Hulu alongside NBC, Fox divested its interest in the company as part of the sale of the 20th Century Fox movie studio and those assets to Disney.² And since then they’ve been kind of adrift.

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Fox One, the standalone streaming service combining Fox News and Fox Sports, doesn’t seem to be lighting the world on fire; the last numbers I’ve seen suggest that the $20/month service has just a couple million subscribers. And while Lachlan Murdoch insists that churn is low and audiences stuck around after football season for Fox News content, we don’t have much in the way of hard data to back that up. Regardless, no one disputes it lags far behind competitors like Paramount+ (CBS) or Peacock (NBC).

Fox does have one bright spot, however: Tubi, a free ad-supported TV (FAST) channel specializing in terrible movies that no one else seems to have. According to Nielsen’s measure of television-based audience behavior, the Gauge, Tubi captures about 3 percent of audience viewing time; when combined with Fox’s broadcast and cable networks, that meant that Fox, as of May, accounted for roughly 7.2 percent of total TV usage. Folding Roku TV—which controls about 3 percent of total viewing time, according to the Gauge—into the Fox family instantly moves it near the top of the charts, ahead of Netflix, NBC, and Paramount. This will instantly scale their advertising efforts. And the passive revenue generated by the cut taken from users who subscribe to other services through Roku will replace a decent chunk of those diminishing affiliate fees; Roku generated more than $4 billion in “platform revenue” last year, which includes both their advertising rates and the fees they charged other streamers for distribution on the Roku platform.

But they’ll also control what is considered by many to be among the most valuable pieces of real estate in the world of streaming: Roku’s homepage. They’ll be able to drive Roku’s 100 million users to subscribe to Fox One.³ And they’ll need some percentage of those users to sign up to counter the ongoing collapse of the cable bundle.