[00:00:00] Marcus Johnson: Hey, gang. It's Monday, July 13th. Ross, Ethan, and listeners, welcome to Behind the Numbers, an EMARKETER podcast. This is the show that helps keep you up to date with, hopefully, with everything media marketing tech, uh, in about 20 minutes or so. I'm Marcus. And joining me for today's [00:00:20] conversation we have two New York people.

[00:00:22] Marcus Johnson: One lives just north of the city, senior analyst Ross Benes.

[00:00:25] Ross Benes: Hey, Marcus.

[00:00:26] Marcus Johnson: Hey, fella. We're also joined by one that lives in the city, Principal Forecasting Writer Ethan Cramer Flood.

[00:00:31] Ethan Cramer-Flood: That is me. Hello. Good to be back.

[00:00:33] Marcus Johnson: Hello, hello. Today's fact

[00:00:38] Marcus Johnson: America's most [00:00:40] popular dog breeds. Uh, Dorothy Neufeld, of, Visual Capitalist wrote a piece, and she has some data in there from US News and World Report, uh, that base popularity of these dog breeds on 1.2 million dog insurance records from 2022 to 2025. So that's what I mean when we say most popular in America.

[00:00:58] Marcus Johnson: Uh, Americans own close to [00:01:00] 60 million, 6-0 million dogs. That's nearly half of all US 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?

[00:01:12] Ross Benes: Feel like Labradoodles have become really popular, so I'm, I'm gonna go with that.

[00:01:15] Marcus Johnson: Yes. It should be. My- ... my parents have, yeah, four. We [00:01:20] have a ton of Labradoodles. Oh, my God. Four. So they're my personal favorite, but, um, yeah. Uh, Ethan, what do you think?

[00:01:26] Ethan Cramer-Flood: Well, I mean, I, I have a distorted view 'cause I live in Manhattan, and every single dog around here is a tiny little poodle or a little wiener dog or something.

[00:01:33] Ethan Cramer-Flood: So, uh, but I feel like that wouldn't really be the answer for the whole country.

[00:01:36] Marcus Johnson: Well, you're right for New York. New York is the Yorkshire Terrier. Um- Yeah ... [00:01:40] but in terms of for the entire country, um, it's the Labrador Retriever, you know, top breed in 16 states. Wow. Strongest in the northeast. Chihuahuas come in second- Wow

[00:01:50] Marcus Johnson: with 14 states, leading in much of the southwest. American Pit Bull Terrier third, with seven states, leading in many of the eastern [00:02:00] states. Um, California and Florida, it's the French Bulldog. New York is the Yorkshire Terrier. Um, but eight different breeds rank first, uh, across the US, revealing surprising regional preferences.

[00:02:11] Ethan Cramer-Flood: I like a Border Collie.

[00:02:13] Marcus Johnson: Yes.

[00:02:14] Ethan Cramer-Flood: That's, that's a handsome dog.

[00:02:15] Ross Benes: Oh, yeah, they're, those are really- My

[00:02:15] Marcus Johnson: childhood

[00:02:16] Ross Benes: dog ... really smart dogs.

[00:02:17] Ethan Cramer-Flood: And they're the smart ones. Yeah.

[00:02:18] Marcus Johnson: Yeah. Incredible choice. I got

[00:02:19] Ross Benes: [00:02:20] two hound dogs sleeping right next to me.

[00:02:22] Marcus Johnson: Yeah, you do. Dogs. Nice. You lucky devil. Ms. Neufeld writing that these clusters suggest the local lifestyles, housing, and longstanding breed popularity continue to influence which dogs Americans bring home.

[00:02:32] Marcus Johnson: We should just show the dogs on this podcast. Then people would actually

[00:02:36] Ethan Cramer-Flood: pay attention. Click bait. Let's go.

[00:02:38] Marcus Johnson: To what we're doing. [00:02:40] Today's real topic, not dogs, unfortunately. Uh, Fox buys Roku. Welcome to the largest free ad supporting streaming television platform in the country.

[00:02:54] Marcus Johnson: Fox is acquiring streaming platform Roku for $22 billion notes Archie Mitchell and Shenaz Mussafer [00:03:00] of the BBC. Fox adds Roku's content and first party data from over 100 million households worldwide to its portfolio of news, 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 a quarter of internet connected devices according to research firm Park Associates.

[00:03:19] Marcus Johnson: Whilst analysts [00:03:20] 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 ad supporting streaming TV service.

[00:03:37] Marcus Johnson: Russell, start with you. Why is this good? Why is this deal [00:03:40] good for Fox and Roku?

[00:03:42] Ross Benes: Well, for Fox it really jumpstarts their digital ad revenues. You know, Fox is still mostly a legacy company. Mm. 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 [00:04:00] expect growth because those linear stations are going to contract.

[00:04:03] Ross Benes: 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, um, expand in particular areas.

[00:04:14] Marcus Johnson: Yeah. It's great for the digital part of it. For Fox's ad business, the deal gives Fox direct access to Roku's, [00:04:20] as I mentioned, audience of 100 million households, which Fox says will help the company target ads more effectively.

[00:04:25] Marcus Johnson: Our principal analyst Corin Stevens writes that Fox will absorb first party viewer data and hardware level identity tracking from Roku OS, giving Fox sophisticated targeting capabilities that rival tech giants like Amazon and Google. So good for them there. Ethan, what stands out to you the most about this [00:04:40] deal?

[00:04:40] Ethan Cramer-Flood: 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 [00:05:00] 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 gonna be off the table relatively soon.

[00:05:11] Ethan Cramer-Flood: 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 [00:05:20] market value went down after the announcement. But if you're Fox, you know, you- to, 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.

[00:05:33] Ethan Cramer-Flood: 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 [00:05:40] 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, it's not hard to see what they were thinking.

[00:05:56] Ethan Cramer-Flood: The question is, you know, did they overpay? For a [00:06:00] business model that doesn't have that much runway for growth left, which is maybe why the market responded the way it did.

[00:06:07] Marcus Johnson: What makes you say that Roku was always gonna get bought?

[00:06:09] Ethan Cramer-Flood: This is an, a point that I was gonna save for, uh, when we start to discuss the possible risks or, or reasons why this deal may not have been the best idea.

[00:06:18] Ethan Cramer-Flood: You know, if you're [00:06:20] 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 [00:06:40] share is strong, but it's not growing that much more either.

[00:06:44] Ethan Cramer-Flood: Uh, 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.

[00:06:55] Marcus Johnson: Mm.

[00:06:56] Ethan Cramer-Flood: Uh, and so this is a, this is a good exit for them, for their [00:07:00] shareholders. Attaches them to a, you know, a much bigger legacy media company, gives them an opportunity to maybe do more than they would've otherwise been able to do.

[00:07:08] Ethan Cramer-Flood: But I think if you, 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.

[00:07:16] Marcus Johnson: Ross, why, why might this be bad for R- Fox or [00:07:20] Roku?

[00:07:20] Ross Benes: Well, so Roku's been very innovative, and they're a, you know, digitally native company.

[00:07:25] Ross Benes: 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 [00:07:40] be difficult for Roku to, to keep that innovative spirit alive when you're owned by Fox.

[00:07:45] Ross Benes: That's a lot different than being independent. And then for Fox, you paid a, a good price for this. Um, 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 gotta know [00:08:00] what you're working with and what you're dealing with to get the most out of it.

[00:08:03] Ross Benes: Roku runs a much different ad business than Fox, you know, so, so to really take advantage, you gotta be pretty adept with ad tech and audience and all, all these things that- I'm sure Fox is aware of and, and knows about, but it, it hasn't been the core of [00:08:20] their business. They haven't ran a operating system for a TV before, for instance.

[00:08:23] Marcus Johnson: Yeah. TD Cow- uh, Cowen analyst Doug Creutz was making the same point, saying history of content platform mergers in media has generally not been kind, pointing to the AT- AT&T, uh, Time Warner, um, deal or bet in 2018. AT&T acquired Time Warner, three years later it [00:08:40] sold, um, Time Warner to, uh, Discovery. So that, that definitely didn't work.

[00:08:45] Marcus Johnson: However, Mike Proulx, uh, Forrester, I think that's how you pronounce it, f- uh, 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 [00:09:00] uncertainty.

[00:09:00] Ethan Cramer-Flood: Yeah. I, I started off on a negative angle. I'm not sure that I believe that. Um, you know, if, if, if you made me choose whether I think this is gonna work out or not, I think it does have a pretty good chance of working out to the positive rather than the negative.

[00:09:15] Ross Benes: Hmm.

[00:09:15] Ethan Cramer-Flood: In particular, depending on the vision that they choose to pursue.

[00:09:19] Ethan Cramer-Flood: [00:09:20] So Tubi is their diamond asset already in free ad supporting t- TV that Fox has, and now they're adding to it the only platform out there that was actually bigger, 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 [00:09:40] 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, we can't really visualize just yet.

[00:09:52] Ethan Cramer-Flood: But they're gonna have these two monumentally huge fast platforms at the same time.

[00:09:58] Marcus Johnson: Mm-hmm.

[00:09:58] Ethan Cramer-Flood: Now, i- in first [00:10:00] instance you're like, "Well, that doesn't make any sense, these are just the same thing twice." 'Cause they're not really the same thing. Tubi has its own set of fans for its own reasons. Roku Channel has a s- a different viewership.

[00:10:09] Ethan Cramer-Flood: Um, but now they're gonna 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 [00:10:20] 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 gonna go in a totally separate direction, you're gonna keep almost all of your digital presence free because that actually aligns with your DNA as a [00:10:40] company now that it's primarily just a free broadcast television station, and maybe, you know, you still have to pay to see Fox News or whatever.

[00:10:45] Ethan Cramer-Flood: They could be carving out just a totally different type of presence. Mm-hmm. Uh, and it could conceivably be successful. Roku Channel's already successful. Tubi is already successful. I mean, Fox becomes, you know, the The company that gives us all free stuff online, uh, when [00:11:00] 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, as, um, dense as they are on TV.

[00:11:09] Marcus Johnson: Ross, I'm wondering what you think here, 'cause it does... I- it's been s- a lot of the headlines was this creates the third largest player in the US by share of viewing according to MoffettNathanson. According to Reuters and the Wall Street [00:11:20] Journal, Fox said The Roku Channel will be kept separate from its free ad-supported streaming platform, Tubi.

[00:11:26] Marcus Johnson: I was looking at some of the numbers from Nielsen's April gauge that measures, uh, the channels Americans use to watch TV. If they merged Tubi and The Roku Channel, if you add- added The Roku Channel's 3% share, um, with Fox's, uh, fast service Tubi's [00:11:40] 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 7.8.

[00:11:51] Marcus Johnson: Are you surprised that they're saying they're gonna keep these se- services separate?

[00:11:54] Ross Benes: Well, that makes... It's not s- surprising to start with. Um, they have a lot to digest [00:12:00] already before you start merging services. I mean, you also have Fox One, Roku has, uh, Howdy and Friendly. Um, 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 [00:12:20] we gonna make The Roku Channel and, and Tubi work together?

[00:12:23] Ross Benes: You know, they, they may be worried about cannibalizing audience if they put it all under one banner. And, and it also could be a territorial thing, too, because if you put it all under one What do you call it? Will, will, will the Tubi people, um, you know, want to be called Roku Channel? Or like, you know, people who work for [00:12:40] or, or who have operated the Roku Channel, how do they feel if it's branded Tubi?

[00:12:44] Ross Benes: I mean, those are things that could be ironed out and handled down the line, but like-

[00:12:48] Marcus Johnson: Yeah ...

[00:12:49] Ross Benes: that, that could be some internal struggle, um, figuring out where you place each of them. I would expect, though, that there will be m- more encouragement [00:13:00] within the Roku platform for people to download Tubi. Like, like, have it, have it featured more on the home screen- Mm-hmm

[00:13:06] Ross Benes: encouraging usage. The, the... It's just like how Netflix's recommendation algorithm works. Like, if, if you log on to Roku, same with Fire TV, they, they can s- 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 [00:13:20] more likely to use it.

[00:13:20] Ross Benes: Yeah. I think they can nudge people to, to use Tubi more than what they have because Tubi's never been owned by a- an OS before. They've had to grow organically, a- and now they have that, um, that behind them.

[00:13:33] Ethan Cramer-Flood: I would be cautious a little bit on adding... You can't just add Tubi's audiences to Roku Channel's [00:13:40] audiences and then say that's the total, right?

[00:13:41] Ethan Cramer-Flood: 'Cause there's gonna be a lar- So L- Lachlan Murdoch from Fox said that he thinks that only a third of the audiences overlap, but I don't know- Oh, wow. Okay ... where he's getting that number. Mm-hmm. That seems, I guess it's possible, but that seems optimistic to me in as much as if you take, you know, two-thirds of Roku's audience, Roku [00:14:00] Channel's audience, and two-thirds of Tubi's audience and you add them together, you're basically talking about 100% of the market, so for, for free ad-supported streaming TV.

[00:14:06] Ethan Cramer-Flood: Yeah. 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 gonna 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, that [00:14:20] does, that is additive because all those viewers are only- Yeah

[00:14:22] Ethan Cramer-Flood: watching one at a time. Yeah. So it depends on how you look at it. So they, they may have this new beast that has, you know, 120 million or 130 million viewers, or they may not, but it's true that all of that time will Will continue to be spent

[00:14:34] Marcus Johnson: Yeah, it depends. Uh, absolutely, it's a good point. Depends how you count it.

[00:14:37] Marcus Johnson: Um, Roku is, in terms of this gauge, they [00:14:40] are fifth, Tubi is sixth. Um, so if you do merge them, even if there is overlap, they're still, they're starting to threaten Prime Video and Disney, um, and get in the mix with some of the, the, the top players here. Um, the other thing that I, I was reading was this, um, in terms of why this might be, bad's probably the wrong word, but something to, to, to watch.

[00:14:56] Marcus Johnson: Conflict of interest. Reuters article pointing out that Roku content [00:15:00] 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.

[00:15:16] Marcus Johnson: So something to watch. Um, Ross, who does, [00:15:20] uh, this deal affect most outside of Fox and Roku?

[00:15:23] Ross Benes: Well, any, uh, streaming company that forks over inventory to Roku as part of their revenue share agreement. So one of the big ways Roku makes money i- isn't just from the Roku Channel. Um, it's like if you have your app on Roku, [00:15:40] they get to sell a portion of the inventory.

[00:15:42] Ross Benes: 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, that was an interesting dynamic when Roku was [00:16:00] an independent company.

[00:16:01] Ross Benes: Now, how do you feel if you're like Disney or you're Comcast or whatever becomes of Comcast now that they're splitting, and you're doing this with a competitor? You're, you're- Mm ... you know, you're, you're giving part of your inventory to Fox to sell. That may shake up how those carriage deals are done.

[00:16:18] Ross Benes: Mm-hmm. And, um, [00:16:20] I, I, I would just pay attention to that going down the line. It's not, like, the biggest thing to affect those streaming companies, but I think they'll be more guarded over- Yeah ... what sort of inventory they give to Roku to sell now that Roku is owned by a competitor.

[00:16:35] Marcus Johnson: Yeah, cer- certainly complicates things.

[00:16:37] Marcus Johnson: Uh, how about for you, Ethan? Who, who, who stands out to you the most in terms of who [00:16:40] might be impacted by this deal?

[00:16:41] Ethan Cramer-Flood: Well, it affects me, that's for sure. I mean, I, I-

[00:16:44] Marcus Johnson: Ethan. Okay, good ...

[00:16:45] Ethan Cramer-Flood: I like Roku. Every, every weekend- ... I'm at my girlfriend's and, uh, she's got one of those little Roku devices, and I'm telling you, those, those things are great.

[00:16:52] Ethan Cramer-Flood: I like it better than my own smart TV, which is way more expensive. So but this is actually, this is, this is, I'm, I'm actually making the same point here [00:17:00] 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.

[00:17:17] Ethan Cramer-Flood: And if I, you know, wake up n- [00:17:20] next year, uh, and, you know, Roku's home screen and then, you know, the, your, 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 [00:17:40] to those being either downgraded on my view, or maybe even at times disappear.

[00:17:45] Ethan Cramer-Flood: This even happened with Roku, actually. I mean, they've had, they've had spats as well, where suddenly, you know, your HBO Max app is just gone or it doesn't work- Mm-hmm ... or whatever because of some dispute. You know, if this type of thing changes the nature of the experience on the Roku device or on the Roku TV, that'll be [00:18:00] bad for consumers, and it could actually lead to sort of Fox killing the golden goose.

[00:18:04] Ethan Cramer-Flood: I 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- Mm-hmm ... 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, [00:18:20] uh, some of Roku's audience.

[00:18:21] Marcus Johnson: I end with this, gents. Uh, 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 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.[00:18:40]

[00:18:40] Marcus Johnson: That's all we've got time for, for today's episode. Thank you so much to my guests. Thank you to Ross.

[00:18:43] Ross Benes: Thanks, Marcus.

[00:18:44] Marcus Johnson: And Ethan.

[00:18:45] Ethan Cramer-Flood: Oh, this was a snappy one. I like it. Let's do it fast like this every time.

[00:18:49] Marcus Johnson: 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.

[00:18:55] Marcus Johnson: Thank you to Lance on the production crew for helping out with this episode, and thanks to everyone for listening to Behind the Numbers: an EMARKETER Podcast. Suzy will be here Wednesday speaking with Ayelet Fishbach, professor of behavioral science and marketing at the University of Chicago Booth School of Business.

[00:19:08] Marcus Johnson: And I'll be back on Friday with Ethan, discussing how our time spent with media is [00:19:20] changing.