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.
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.
