Roku stock is falling after the company said on Friday it may take Fox apps off its streaming platform.
“Roku’s distribution agreement with FOX Corp is set to expire on Jan. 31. We offered FOX an extension so that Roku can continue to bring a large and valuable audience to FOX but FOX declined,” the company said on its blog. “If an agreement is not reached, we will be forced to remove FOX channels from the Roku platform. We will no longer have the legal right to distribute their content.”
Roku shares (ticker: ROKU) were down 6.9% to $121.65 on Friday, while Fox was off 0.5% to $36.27. The S&P 500 had fallen 1.6%.
Roku said negotiations with Fox will continue and the company hopes they can reach an agreement. When asked for comment, Roku sent the same statement it posted on its corporate blog.
“Roku’s threat to delete FOX apps from its customers’ devices is a naked effort to use its customers as pawns. To be clear, FOX has not asked Roku to remove our apps, and we would prefer Roku continue to make them available without interruption,” a Fox spokesperson said in an emailed statement. “Only Roku can pull apps from its customers’ devices, and we would urge them to stop the intimidation tactics and reconsider the merits of irritating their best customers in pursuit of Roku’s own interests.”
Barron’s parent company News Corp and Fox have common ownership.
Roku sells video-streaming hardware, which enables consumers to watch content streamed over the internet, and licenses its operating system to TV makers. The company’s stock was one of the best-performing stocks in the market last year. Its shares were up about 337% in 2019.
Wall Street analysts are generally positive on Roku, with 68% having a Buy or Overweight rating on the stock and 16% with a Hold rating, according to FactSet. The company is slated to report its fourth-quarter earnings results on Feb. 13.
“Roku is acting from a position of strength, leveraging its leading OTT viewership,” Rosenblatt Securities analyst Mark Zgutowicz wrote in a note to clients Friday. “We are buyers of the stock on weakness here.”
Write to Tae Kim at tae.kim@barrons.com
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February 01, 2020 at 03:39AM
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Roku Stock Falls After Company Says It May Remove Fox Apps - Barron's
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