It’ll take a lot of money to break media giant Fox (NASDAQ:FOXA) out of the Free Ad-supported Streaming Television (FAST) game, as CEO Lachlan Murdoch turned down a $2 billion offer. Fox stock is up slightly in Friday afternoon’s trading, so investors are pretty happy about the news.
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Tubi is Fox’s entrant in the FAST stakes, alongside the likes of Roku’s (NASDAQ:ROKU) Roku Channel, Pluto TV, and several others. Contained within Tubi’s borders are a range of television shows from “Dance Moms” to “Hell’s Kitchen” and a substantial array of movies. Fox paid around $440 million for Tubi back in August 2020. Thus, a $2 billion offer for it today might have been considered a slam-dunk win. But for Fox, it wasn’t slam-dunk enough to take the deal.
Fox clearly wants to keep Tubi. Second quarter revenue for Tubi jumped to $200 million. That’s a 25% jump over the previous quarter. The potential gains are also substantial going forward; a Digital TV Research study noted that worldwide demand for TV series and movies will hit $91 billion in 2028, more than double the amount from 2022. That’s especially the case as more streaming platforms start rolling out ad-supported tiers to supplement their own offerings.
Meanwhile, Wall Street is largely supportive of Fox. Analyst consensus calls it a Moderate Buy. With an average price target of $37.91, FOXA stock also comes with 5.69% upside potential.
