Fox acquires San Francisco streaming service Tubi for $440 million

MILLBRAE —  Fox Corp. on Tuesday said it has agreed to acquire San Francisco streaming business Tubi for $440 million in an effort to expand its audience and attract more advertising dollars.

Tubi, a free, ad-supported streaming service, has more than 20,000 shows and movie titles from 250-plus content partners. The company said it had 25 million monthly active users in December.

Ad-supported streamers such as Tubi have been appealing to media companies as they seek to reach younger consumers who are looking for ways to watch TV and movies for free.

“Tubi will immediately expand our direct-to-consumer audience and capabilities and will provide our advertising partners with more opportunities to reach audiences at scale,” Fox Chief Executive and Chairman Lachlan Murdoch said in a statement.

Unlike other streaming services such as Netflix, Tubi does not fund original productions or serve up the top 1% of licensed shows such as “Seinfeld.” Instead, Tubi viewers can see the first season of “The Bachelor” or older movies, including “The Last Samurai.”

In a market crowded with paid streaming services, consumers are hungry for free options, CEO Farhad Massoudi told the L.A. Times last year. “Subscription fatigue is a real problem,” Massoudi said.

“We look forward to working together with Fox to accelerate Tubi’s leadership position in the market and bring new competencies to Fox,” Massoudi said in a statement.

Tubi, which has about 280 employees, will remain in San Francisco.

Some ad-supported streamers have been prime acquisition targets, including Irvine-based Xumo, which was acquired by Comcast last month for more than $100 million. Last year, Viacom purchased Pluto TV, which offers live and on-demand channels to be streamed, for $340 million.

Fox Corp., owner of Fox News and Fox Sports, is the New York company that emerged after Walt Disney Co. purchased the entertainment assets of 21st Century Fox for $71.3 billion last year.

Fox said it will mostly finance the acquisition by selling its stake in Roku, a Los Gatos company that sells connected TV devices and also provides software for streaming services.

The Tubi deal is expected to close before June 30. Fox said that in addition to the $440 million, the deal also may provide $50 million in deferred consideration and unvested options over three years.

In the U.S., the video ad market is expected to grow from $41.76 billion in 2020 to $59.45 billion in 2023, according to research firm EMarketer. By comparison, TV advertising is projected to drop 3% from $71 billion in 2020 to $68.89 billion 2023, EMarketer said.