Roku is paying $185 million to acquire Frndly TV, a provider of low-cost TV bundles delivered via streaming.
The all-cash deal includes $75 million in holdbacks tied to certain performance targets and milestones over the next two years.
Roku announced the deal at the same time it reported first-quarter earnings, with revenue rising 16% to $1.02 billion.
The deal, which is expected to close during the current April-to-June quarter, brings another scaled tech player into the world of internet-delivered pay-TV. The sector is currently dominated by YouTube TV, which has 8 million subscribers. Disney is also making moves in the space, having agreed to acquire Fubo earlier this year, giving it 6 million subscribers between Fubo and Hulu + Live TV.
Frndly operates at the lower end of the price spectrum, with plans offering dozens of general-entertainment channels for $9 to $13 a month. After launching in 2019, the company said it had reached 700,000 subscribers by 2022. In avoiding pricey sports programming, the service positioned itself similarly to Philo TV, which has cracked the 1 million subscriber mark after a longer run in the marketplace.
“Frndly TV’s growth and expertise in direct-to-consumer subscription services make it a valuable addition to Roku,” Roku said in its quarterly shareholder letter, “and we believe our expertise in recommending relevant content to viewers will help Frndly TV attract, engage, and retain more subscribers. This acquisition is intended to support our focus on growing platform revenue and Roku-billed subscriptions.”
Some initial players like Sony’s PlayStation Vue, AT&T and Dish Network, which planted a flag as “skinny bundles,” have either exited the business or seen their subscriber levels decline markedly in recent years after they were forced to raise prices.
Source link
