Fox-Roku Deal Could Drive Substantial Revenue, Cost Synergies for Media Company, BofA Says in Upgrade

01:34 PM EDT, 10/16/2026 (MT Newswires) -- Fox's (FOX, FOXA) pending acquisition of TV streaming platform Roku (ROKU) has the potential to generate significant revenue and cost-saving opportunities for the media giant, BofA Securities said Friday. Fox agreed to buy Roku in June in a cash-and-stock deal that valued the latter at about $22 billion, creating a media and technology entity with one of the largest streaming businesses in the US. The respective shareholders of both companies approved the deal earlier this week. BofA expects the transaction to close early next year. The combined company could generate $530 million in revenue synergies in BofA's base case for calendar 2028, compared with $184 million in its bear case and $1.07 billion in its bull case. Both companies are entering the transaction with "operating momentum," according to the brokerage. "Our base case does not contemplate all revenue opportunities, creating significant upside over time," BofA analyst Jessica Reif Ehrlich said in a note to clients Friday. BofA upgraded its rating on the Fox stock to buy from underperform and raised its price objective to $85 from $54. The company's class A and B shares were up 0.3% each in Friday afternoon trade. Roku shares were down 0.1%. The revenue opportunities include bundling Fox's premium sports content with Roku's ad inventory and using the platform's data and ad-tech capabilities to expand performance advertising, according to BofA. The companies can also attract small and medium businesses through Roku's ad manager offering and Fox's local sales network, as well as generate subscription growth. The combined company is expected to achieve the targeted $400 million in annual cost savings by the second year after the transaction closes, BofA said. The savings, representing about 10% of the companies' combined selling, general and administrative and corporate cost base, could come from advertising sales efficiencies, streamlined advertising technology platforms and reduced corporate overhead, according to the note. The brokerage said its prior stock rating reflected the risk of an early National Football League renewal and doubts around Fox's long-term standing in an increasingly streaming-centric media environment. However, the Roku deal has "fundamentally" shifted the strategic and financial narrative around the media giant, especially when the risk of a near-term NFL renewal has largely disappeared until the 2029 opt-out window, BofA said. "By adding a scaled (operating system) and distribution platform, Roku provides Fox with a credible path to transition its predominately linear portfolio toward (direct-to-consumer), addressing the company's most significant weakness," Ehrlich wrote. Fox is scheduled to report its fiscal first-quarter results Nov. 2. Earlier this month, Paramount Skydance completed its acquisition of media and entertainment giant Warner Bros. Discovery, creating a combined company called Skydance (SKYD). In June, Comcast (CMCSA) announced plans to split into two publicly traded companies, separating its NBCUniversal and Sky media businesses from its broadband and connectivity operations as the media giant aims to boost strategic focus for each unit. Price: 57.80, Change: +0.66, Percent Change: +1.15