Fox announced it will acquire Roku for $22 billion. The stock dropped. Analysts called it a good deal anyway because analysts get paid whether they're right or wrong.
Roku makes streaming devices that cost thirty dollars. Fox is paying $22 billion for the company. The math works out to roughly 733 million Roku sticks, which is coincidentally the exact number currently gathering dust in junk drawers across America.
The deal gives Fox access to Roku's "platform." That's the word executives use when they mean "we have no f*cking idea what we bought but the consultant slides looked impressive." Roku has 85 million active accounts. Fox has cable news and football. Together they will create something nobody asked for.
Investors sold Fox stock because spending $22 billion on a device that streams other people's content seemed expensive. The analysts disagreed. They pointed to synergies, which is finance-speak for "trust us, it'll make sense eventually."
Roku's entire business model is selling cheap hardware at a loss and making money on ads. Fox's business model is selling expensive cable packages and making money on ads. The combined company will sell cheap hardware at a loss, expensive cable packages nobody wants, and make money on ads that nobody watches. Wall Street calls this vertical integration.
The acquisition makes Fox a "technology company." That's what media companies call themselves right before they lay off 4,000 people and discover their users hate the new interface.
Retail traders saw the stock drop and immediately bought the dip because they read somewhere that Warren Buffett likes media companies. Warren Buffett has never owned Roku. He also didn't buy Fox. But the trading app had a green button and someone on Reddit said it was oversold.
Fox paid $22 billion for a company whose primary product is a device that helps you avoid watching Fox.
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