Roku (R35) Risk Analysis

After the completion of the transaction, our stockholders will own a smaller percentage of the combined company than they now own of Roku. Immediately upon completion of the transaction, we anticipate that our stockholders will hold approximately 27% of the combined company on a pro forma basis. In addition, the Fox Class A common stock that the stockholders will receive generally does not have the right to vote on matters affecting the combined company, including the election of directors. Consequently, our stockholders, as a group, will have reduced ownership and less ability to influence the combined company compared to their ownership and voting power in us.

Under the Merger Agreement, at the effective time of the Mergers, each share of our common stock (subject to certain exceptions, including shares of our common stock owned by our stockholders who have not voted in favor of the adoption of the Merger Agreement and have properly exercised appraisal rights in accordance with Section 262 of the General Corporation Law of the State of Delaware) issued and outstanding immediately prior to the effective time of the Mergers will be cancelled and converted into the right to receive (1) 0.9693 (as defined above, the "Exchange Ratio") fully paid and non-assessable shares of Fox Class A common stock and (2) $96.00 in cash, without interest (as defined above, the "Per Share Cash Amount") (as explained in Note 1 of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report, the Exchange Ratio and the Per Share Cash Amount are subject to adjustment in certain limited circumstances relating to Roku stockholders who exercise appraisal rights). The market value of the stock-based consideration our stockholders will receive in the Mergers will therefore fluctuate with the market price of Fox Class A common stock. The implied value of the merger consideration to our stockholders has fluctuated since the date of the Merger Agreement announcement and will continue to fluctuate until the date the Mergers are completed, which could occur a considerable amount of time after the date hereof. Fox's Class A common stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Fox's and our respective businesses, operations, and prospects, risks inherent in the respective businesses, changes in market assessments of the likelihood that the Mergers will be completed or the value that may be generated by the Mergers, and changes in expectations regarding the timing of the Mergers and regulatory considerations. Many of these factors are beyond both our and Fox's control. You are urged to obtain current market quotations for both our and Fox's common stock traded on the Nasdaq Global Select Market (trading symbols "ROKU" and "FOXA," respectively). Further, our Board has received an opinion from our financial advisor in connection with the signing of the Merger Agreement to the effect that, as of the date of such opinion and based upon and subject to the various assumptions, qualifications, limitations, and other matters set forth therein, the merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of our common stock (other than Fox or any affiliate of Fox) was fair, from a financial point of view, to such holders. Changes in our or Fox's operations and prospects, general market and economic conditions, and other factors that may be beyond the control of us or Fox, and on which our financial advisor's opinion was based, may significantly alter the value of Roku or Fox or the prices of the shares of our common stock or Fox common stock by the time the Mergers are completed. The opinion does not speak as of the time the Mergers will be completed or as of any date other than the date of such opinion. Because we do not currently anticipate asking our financial advisor to provide an updated fairness opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the Mergers are completed.

Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. Our founder, Chairman, and Chief Executive Officer, Anthony Wood, holds and controls the vote of a significant number of shares of our outstanding common stock, and therefore Mr. Wood will have significant influence over our management and all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of Roku or our assets, including the Mergers, for the foreseeable future. If Mr. Wood's employment with us is terminated, he will continue to have the same influence over matters requiring stockholder approval. In addition, the holders of Class B common stock collectively will continue to be able to control all matters submitted to our stockholders for approval even if their stock holdings represent less than a majority of the outstanding shares of our common stock. This concentrated control will limit the ability of holders of our Class A common stock to influence corporate matters for the foreseeable future, and, as a result, the market price of our Class A common stock could be adversely affected. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which has the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. As a result of such transfers, as of June 30, 2026, Mr. Wood controls a majority of the combined voting power of our Class A and Class B common stock even though he only owns 11.3% of the outstanding Class A and Class B common stock. As a member of our Board, Mr. Wood owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Wood is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other stockholders do not support. This concentrated control could also discourage a potential investor from acquiring our Class A common stock, which has limited voting power relative to the Class B common stock, and might harm the market price of our Class A common stock. We have not elected to take advantage of the "controlled company" exemption to the corporate governance rules for companies listed on The Nasdaq Global Select Market.

The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control, including: - actual or anticipated fluctuations in our financial condition, operating results, and key performance metrics;- expectations or uncertainty regarding the Mergers;- changes in projected operational and financial results;- our loss of key content partners;- changes in laws or regulations applicable to our products or platform;- the commencement or conclusion of legal proceedings that involve us;- actual or anticipated changes in our growth rate relative to our competitors;- announcements of new products or services by us or our competitors;- announcements by us or our competitors of significant acquisitions, strategic partnerships, or joint ventures;- capital-raising activities or commitments;- additions or departures of key personnel;- issuance of new or updated research or reports by securities analysts;- the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance;- fluctuations in the valuation of companies perceived by investors to be comparable to us;- the perception that our environmental, social, and corporate governance performance is inadequate compared to that of our competitors;- sales of our Class A common stock, including short selling of our Class A common stock;- share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;- general economic and market conditions; and - other events or factors, including those resulting from civil unrest, war, foreign invasions, geopolitical tensions, terrorism, or public health crises, or responses to such events. Furthermore, the stock markets frequently experience extreme price and volume fluctuations that affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, elections, interest rate changes, tariffs, or international currency fluctuations, may negatively impact the market price of our Class A common stock. As a result of such fluctuations, you may not realize any return on your investment in us and may lose some or all of your investment. In addition, we and other companies that have experienced volatility in the market price of their stock have been, and may in the future be, subject to securities class action litigation or derivative litigation. Such litigation could result in substantial costs and divert our management's attention from other business concerns.

We may issue additional securities in the future and from time to time. Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell or issue Class A common stock, convertible securities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences, and privileges senior to those of holders of our Class A common stock.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the market price of our Class A common stock could decline. All of our outstanding Class A shares are eligible for sale in the public market, other than shares and stock options exercisable held by directors, executive officers, and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act. In addition, we have reserved shares for future issuance under our equity incentive plan. Our directors, employees, and certain contingent workers are subject to our quarterly trading window, which generally opens at the start of the second full trading day after the public dissemination of our annual or quarterly financial results and closes at the end of the fifteenth day of the last month of each quarter. These directors, employees, and contingent workers may also sell shares during a closed window period pursuant to trading plans that comply with the requirements of Rule 10b5-1(c)(1) under the Exchange Act. When these shares are issued and subsequently sold, it is dilutive to existing stockholders and the market price of our Class A common stock could decline.

The trading market for our Class A common stock is influenced in part by the research and reports that securities or industry analysts publish about us, our business, and our competitors. If one or more of these analysts downgrade our stock or publish unfavorable research about our business, including lowered ratings, price targets, or earnings estimates, the price of our Class A common stock could decline. If our operating results fail to meet forecasts or analysts' expectations, our stock price could decline regardless of the overall performance of our business. Further, if one or more of these analysts drop coverage or fail to publish reports on us regularly, the market price and trading volume of our Class A common stock could decline.

There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable by our stockholders. Our charter documents also contain other provisions that could have an anti-takeover effect, such as: - establishing a classified Board so that not all directors are elected at one time;- permitting our Board to establish the number of directors and fill any vacancies and newly created directorships;- providing that directors may only be removed for cause;- prohibiting cumulative voting for directors;- requiring super-majority voting to amend some provisions in our certificate of incorporation and bylaws;- authorizing the issuance of "blank check" preferred stock that our Board could use to implement a stockholder rights plan;- eliminating the ability of stockholders to call special meetings of stockholders;- prohibiting stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; and - reflecting our two classes of common stock as described above. Moreover, because we are incorporated in Delaware, we are governed by Section 203 of the Delaware General Corporation Law, which prohibits a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Any provision in our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could affect the price that some investors are willing to pay for our Class A common stock.