Fox's stock is down about 25% since it agreed to buy Roku for $22 billion, and the market has decided the deal is a blunder. Simeon McMillan of Accrued Interest thinks the market is wrong. His case: Roku controls roughly 44% of how Americans reach streaming on the big screen, about 3x the next platform, so Fox just bought the "front door" to streaming and around 100 million connected TVs in North America. Look under the surface and the deal is closer to 16-17x free cash flow once you account for Roku's barely-tapped ad levers and synergies.

We get into the homepage that became 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.

See Simeon's post on Fox / Roku here: https://www.accruedint.com/p/the-strait-of-roku-how-fox-seized

This episode is sponsored by my upcoming AI webinar with AlphaSense.

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Chapters:

00:00 What's coming: Fox-Roku, plus Spotify, Google and Meta

01:08 Sponsor: my AI webinar with AlphaSense

02:24 Guest intro: Simeon McMillan, Accrued Interest

03:05 The Fox-Roku deal and why Simeon thinks it makes sense

05:30 Roku as the "Strait of Hormuz" of streaming (44% of viewing)

06:25 Why Fox has the smartest M&A team in media

07:55 Buying the "front door": ~100M connected TVs

10:03 The Roku homepage as the new "Netflix homepage"

13:44 The ad-sales levers hiding under the multiple

16:31 Valuation: 22x EBITDA, ~16-17x free cash flow with synergies

18:01 My pushback: Fox down 25%, winner's curse, thin synergies

19:35 The real risk of staying pure-play (Viacom, Paramount)

24:51 Rebundling and why everyone's partnered up by 2028

26:08 Is Fox+Roku actually better, or could anyone have bought this?

28:01 Cord-cutting, YouTube TV, and the Disney bloody nose

32:07 The Fox bet Simeon likes most: Tubi

38:30 Why now? The 50% streaming inflection and a shrinking buyer pool

42:21 Does AI slop break or boost the distribution thesis?

48:06 The gotcha: bullish Roku, bearish Spotify (the Pokemon theory of media)

52:22 Google and Meta as "true value stocks"

56:55 The complexity discount, Meta's enterprise tools, and founder control

59:13 Wrap and where to find Accrued Interest

Simeon McMillan / Accrued Interest: https://accruedinterest.substack.com

Links:

Yet Another Value Blog - https://www.yetanothervalueblog.com

See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

Production and editing by The Podcast Consultant - https://thepodcastconsultant.com/