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Foreign.
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It's Monday, July 13th. Ross, Ethan and listeners, welcome to behind the numbers and e marketer podcast. This is the show that helps keep you up to date with hopefully with everything. Media marketing tech in about 20 minutes or so. I'm Marcus and joining me for today's conversation, we have two New York people. One lives just north of the city. Senior analyst Ross Benish.
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Hey, Marcus.
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Hey, fella. We're also joined by one that lives in the city, principal forecasting writer Ethan
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Kramer Flood, that is me. Hello. Good to be back.
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Hello.
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Hello. Today's fact, America's most popular dog breeds. Dorothy Neufeld, visual capitalist, wrote a piece. She has some data in there from U.S. news World report that base popularity of these dog breeds on 1.2 million dog insurance records from 2022 to 2025. So that's what we mean when we say most popular America. Americans own close to 60 million 6,0 million dogs. That's nearly half of all u. S. Households have a dog. There's no single dog breed that dominates the country. So popular dog breeds by state. Any guess on the most popular dog breed?
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I feel like labradoodles have become really popular, so I'm gonna go with that.
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It should be my. My parents have. Yeah, four. We have a ton of labradoodles. They're my personal favorite, but yeah. Ethan, what do you think?
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Well, I mean, I have a distorted view because I live in Manhattan and every single dog around here is a tiny little poodle or a little wiener dog or something, so. But I feel like that wouldn't really be the answer for the whole country.
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Well, you're right for New York. New York is the Yorkshire terrier. But in terms of for the entire country, it's the Labrador retriever. Top breed in 16 states, strongest in the Northeast. Chihuahuas come in second with 14 states leading in much of the southwest American pit bull terrier, third with seven states. Leading in many of the eastern states, California and Florida is the French bulldog. New York is the Yorkshire terrier. But eight different breeds rank first across the US Revealing surprising regional preferences.
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I like a border collie. Yes, that's a handsome dog.
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Oh, yeah, those are really smart dogs.
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And the smart ones.
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Yeah, incredible.
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I got two hound dogs sleeping right next to me.
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Yeah, you do. Lucky devil. Ms. Neufeld writing that these clusters suggest the local lifestyles, housing and long standing breed popularity continue to influence which dogs Americans bring home. We should just show the dogs on this podcast, then people would actually click page. Let's go to what we're doing today's real topic, not dogs, unfortunately. Fox buys Roku. Welcome to the largest free ad sporting streaming television platform in the country. Fox is acquiring streaming platform Roku for $22 billion, notes Archie Mitchell and Shenaz Moussafa of the BBC. Fox adds Roku's content and first party data from over 100 million households worldwide to its portfolio of new sports entertainment streaming platforms such as Tubi and Fox One. Roku is the biggest streaming platform for smart TVs in the US running on more than quarter quarter of Internet connected devices, according to research firm Park Associates. Whilst analysts viewed the acquisition positively, investors reacted negatively, sending Fox's shares downwards initially at least. Fox previously held a 5% stake in Roku from 2013, which it sold in 2020 to help fund its acquisition of Tubi, its fast service free airsporting streaming TV service. Ross, I'll start with you. Why is this good? Why is this deal good for Fox and Roku?
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Well, for Fox it really jump starts their digital ad revenues. You know, Fox is still mostly a legacy company and the what they do have for streaming has largely been acquired such as Tubi. This gives them a much bigger footprint for an area where they expect growth because those linear stations are going to contract. And then for Roku you're part of a much broader entity so you know, hopefully you're able to have more resources to draw on when you need to invest and expand in particular areas.
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Yeah, it's great for the digital part of it. For Fox's ad business, the deal gives Fox direct access to Roku's, as I mentioned, audience of 100 million households, which Fox says will help the company target ads more effectively. Our principal analyst Corin Stephens, writing that Fox will absorb first party viewer data and hardware level identity tracking from Roku os, giving Fox obiscated targeting capabilities that rival tech giants like Amazon and Google. So good for them there. Ethan, what stands out to you the
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most about this deal, the most sort of definitive way that this is good for Fox is that someone was gonna buy Roku anyway. And if you're Fox, it's probably for the best that it's you. Even if this is a defensive maneuver or it's just that there's an opportunity out there and you need to do something based on your position in the marketplace right now and acquiring Roku is a reasonable enough something, particularly since it was probably going to be off the table relatively soon. So now you're like, okay, this may not be a home run and we'll talk about the potential negatives or the reasons for skepticism and the reasons maybe that their market value went down after the announcement. But if you're Fox, you know, to Ross's point, this gives you the opportunity to future proof yourself a little bit by shifting the balance of your business in, into something more digital. It gives you sort of some runways to try different things. You've got a whole new source of first party data. You've got a possibility to carve out and dominate an element of digital entertainment that is still somewhat up for grabs in terms of free ad supported streaming tv. You know, we'll have to see what this turns into in terms of a long term strategy. But it's not hard to see what they were thinking. The question is, you know, did they overpay for a business model that doesn't have that much Runway for growth left, which is maybe why the market responded the way it did.
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What makes you say that Roku was always going to get bought?
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This is a point that I was going to save for when we start to discuss the possible risks or reasons why this deal might not have been the best idea. If you're Roku, you took this deal because it's a good price and it's a good payout. And you are sitting there as a relatively small, relatively vulnerable player amidst a sea of big boys. And your ad revenue growth is still okay, but it is already slowing. And your market share is strong, but it's not growing that much more either. And once you're confronted with the need to compete on content and value adds, it's just questionable the extent how big Roku's business was ever going to get. And so this is a, this is a good exit for them, for their shareholders, attaches them to, you know, a much bigger legacy media company, gives them an opportunity to maybe do more than they would have otherwise been able to do. But I think if, if you're trying to figure out why the share price went down after the announcement, it's because the, the market doesn't necessarily see Roku as a huge growth, growth driver.
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Ross, why, why might this be bad for Fox or Roku?
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Well, so Roku's been very innovative and they're a, you know, digitally native company. There isn't a great history of taking like a digital media company and meshing it with the legacy media company. Most of those mergers have gone pretty badly. AOL Time Warner is like the poster child of what I'm talking about. So it may be difficult for Roku to keep that innovative spirit alive when you're owned by Fox. That's a lot different than being independent. And then for Fox, you paid a good price for this. Are you going to be able to squeeze out enough value over the long run to justify what you just paid? You know, you really got to know what you're working with and what you're dealing with to get the most out of it. Roku runs a much different ad business than Fox, you know, so, so to really take advantage, you got to be pretty adept with ad tech and audience and all these things that I'm sure Fox is aware of and knows about, but it hasn't been the core of their business. They haven't ran an operating system for a TV before, for instance.
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Yeah, TD Cowan analyst Doug Kreutz was making the same point, saying history of content platform mergers and media has generally not been kind, pointing to the AT and T Time Warner Dior bet. In 2018, AT&T acquired Time Warner. Three years later it sold Time 1 to Discovery. So that, that definitely didn't work. However, Mike Prow forested. I think that's how you pronounce it. Forrester's VP and research director thinks maybe it's too early to take the drop in share price as a negative market market reaction, noting that big media deals often get punished in the short term because they introduce uncertainty.
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Yeah, I started off on a negative angle. I'm not sure that I believe that, you know, if, if you made me choose whether I think this is going to work out or not, I think it does have a pretty good chance of working out to the positive rather than the negative, in particular depending on the vision that they choose to pursue. So Tubi is their diamond asset already and free ad supporting TV that Fox has and now they're adding to it the only platform out there that was actually bigger in the Roku Channel. Now they probably didn't do this primarily to get the Roku Channel. I assume that this is more a play for the first party data and for access to all of those households, you know, the Roku front screen and then ultimately to integrate Fox's existing content online somehow in some way that we can't really visualize just yet. But they're going to have these two monumentally huge fast platforms at the same time. In first instance you're like, well, that doesn't make any sense. These are just the same thing twice. They're not really the same thing. Tubi has its own set of fans for its own reasons. Roku Channel has a different viewership, but now they're going to be utterly dominant in this space. So if you choose your corporate strategy, moving into the digital world to be this space rather than where all of your peers are going, which are premium subscription ott, high cost streaming services, either very expensive with no ads or still kind of expensive with ads. And if you're Fox and you're going to go in a totally separate direction, you're going to keep almost all of your digital presence free because that actually aligns with your DNA as a company now that is primarily just a free broadcast television station and maybe, you know, you still have to pay to see Fox News or whatever. They could be carving out just a totally different type of presence and it could conceivably be successful. Roku Channel is already successful. Tubi is already successful. And if Fox becomes, you know, the, the company that gives us all free stuff online when nobody else is doing that, that might be a position that they could ultimately benefit from if they, if they crack the code of actually getting ad ads online to be as dense as they are on tv.
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Ross, I'm wondering what you think here, because it does. It's been a lot of the headlines was this creates the third largest player in the US by share of viewing, according to Moffat Nathanson. According to Reuters and the Wall Street Journal, Fox said the Roku channel will be kept separate from its free and supported streaming platform, Tubi. I was looking at some of the numbers from Nielsen's April gauge that measures the channels Americans use to watch TV if they merged to be in the Roku channel. If you added the Roku Channel's 3% share with Fox's Fast Service 2B's 2.3% share, you get a 5.3% slice. That seems small, but that would leapfrog Disney's 5% to take third place behind YouTube at 13.4 and Netflix at 6.7.8. Are you surprised that they're saying they're going to keep these services separate?
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Well, that makes it sound surprising to start with. They have a lot to digest already before you start merging services. I mean, you also have Fox one, Roku has Howdy and Friendly. There's a bunch of services under the umbrella of this combined company. And I think you would start combining or eliminating a few of those before you take on something as big as, like, how are we going to make the Roku channel and 2B work together? You know, they may be worried about cannibalizing audience if they put it all under one banner. And it also could be a territorial thing too. Because if you put it all under one, what do you call it? Would the to be people, you know, want to be called Roku Channel? Or like, you know, people who work for or who have operated the Roku Channel. How do they feel if it's branded to be? I mean, those are things that could be ironed out and handled down the line, but like, yeah, that could be some internal struggle figuring out where you place each of them. I would expect though, that there will be more encouragement within the Roku platform for people to download Tubi. Like, have you have it featured more on the home screen, encouraging usage? It's just like how Netflix's recommendation algorithm works. Like if you log on to Roku. Same with Fire tv. They can kind of steer you toward an app if you don't have it already or even if you have it, like place it in front of you so you're more likely to use it. I think they can nudge people to use Tubi more than what they have because Tubi's never been owned by an OS before. They've had to grow organically and now they have that, that behind them.
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I would be cautious a little bit on adding. You can't just add to these audiences, to Roku Channel's audience and then say that's the total. Right. Because there's going to be a lot. So Lachlan Murdoch from Fox said that he thinks that only a third of the audiences overlap, but I don't know where he's at that number. That seems, I guess it's possible, but that seems optimistic to me. In as much as if you take, you know, 2/3 of Roku's audience, Roku Channel's audience and 2/3 of Tubi's audience, and you add them together, you're basically talking about 100% of the market for, for free ad supported streaming TV. So he. That's an optimistic data point to say, oh, we've got this massive, massive amount of unduplicated viewership that we're now going to be able to bring together. I sort of suspect that that isn't true. Although if you add the time spent numbers together, of course that is additive because all those viewers are only watching one at a time. So it depends on how you look at it. So they may have this new beast that has 120 million or 130 million viewers, or they may not. But it's true that all of that time will continue to be spent.
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Yeah, it depends. Absolutely. It's a good point. Depends how you count it. Roku is in terms of this gauge, they are fifth to be a sixth. So if you do merge them, even if there is overlap, they're starting to threaten Prime Video and Disney and get in the mix with some of the top players here. The other thing I was reading was this, in terms of why this might be. Bad's probably the wrong word, but something to watch. Conflict of interest. Reuters article pointing out that Roku content distributor carries streaming apps from Fox competitors like Paramount, NBC Universal, Netflix and others. In turn, Fox, a major producer of sports and news programming, licenses the content to pay TV operators like Comcast and YouTube TV, which ostensibly compete with free platforms like Roku and Samsung, especially as consumers look to cut spending as inflation continues to rise. So, something to watch. Ross, who does the this deal affect most outside of Fox and Roku?
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Well, any streaming company that forks over inventory to Roku as part of their revenue share agreement. So one of the big ways Roku makes money isn't just from the Roku channel. It's like if you have your app on Roku, they get to sell a portion of the inventory. So if Pluto TV or Hulu or whoever wants to be on Roku that they agree to some sort of inventory exchange, they ask for a third. They don't always get it, especially for the more popular apps, but that was an interesting dynamic. Fire TV uses something similar, but that was an interesting dynamic when Roku was an independent company. Now, how do you feel if you're like Disney or your Comcast or whatever becomes of Comcast now that they're splitting and you're doing this with a competitor? You're, you know, you're, you're given part of your inventory to Fox to sell. That may shake up how those carriage deals are done. And I would just pay attention to that going down the line. It's not like the biggest thing to affect their streaming companies, but I think they'll be more guarded over what sort of inventory they give to Roku to sell now that Roku is owned by a competitor.
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Yeah, it certainly complicates things. How about for you, Ethan, who stands out to you the most in terms of who might be impacted by this deal?
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Well, it affects me, that's for sure.
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I mean, Ethan. Okay, good.
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I like Roku. Every weekend I'm at my girlfriend's and she's got one of those little Roku devices. I'm telling you, those things are great. I like it better than my own Smart tv, which is way more expensive. But this is actually, I'm actually making the same point here, because Roku's user interface is really quite pleasant. It works really well. And one of Roku's big value propositions has been that neutrality. And both for consumers and for their partners, that neutrality has worked and it's made for a pretty good experience for everyone across the board. And if I wake up next year and Roku's home screen and then your landing page end up being heavily Foxified and is designed to just get me to watch Fox products and. Or they have to Ross's point, had conflicts with other platforms, leading to those being either downgraded on my view or maybe even at times disappear. This even happened with Roku, actually. I mean, they've had spats as well where suddenly your HBO Max app is just gone or doesn't work or whatever because of some dispute. If this type of thing changes the nature of the experience on the Roku device or on the Roku tv, that'll be bad for consumers and it could actually lead to sort of Fox killing the golden goose. Expect that they would be cautious about that. But on the other hand, they could make more money, right? This is always the balancing act that a media organization like this would have to lead to. It's like, all right, well, if we lean into this, we can in the short term make more, but on the other hand, we might lose some of Roku's audience.
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And then with this gents, our Corin Stevens writing this Fox Roku deal signals that simply owning great content is no longer enough to win the streaming wars. To survive, media companies must control the full tech stack, the the interface, the data infrastructure, and the monetization engine. The Fox Roku deal expected to close in the first half of 2027. So we'll keep an eye on that. That's all we've got time for for today's episode. Thank you so much to my guests. Thank you to Ross.
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Thanks Marcus.
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And to Ethan.
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Oh, this was a snappy one. I like it. Let's do it fast like this every time.
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I try every time. Just doesn't go well. So I spend 10 minutes at the beginning talking about what I've been researching for four hours. Thank you to Lance on the production crew for helping out with this episode. And thanks to everyone for the scene to buying the numbers New market apartment. Susie will be here Wednesday speaking with Ayelet Fishbuck, professor of Behavioral Science and Marketing at the University of Chicago Booth School of Business. And I'll be back on Friday with Ethan discussing how our time spent with media is changing.