Roku exploring strategic options, including sale of company, sources say

By Echo Wang, Milana Vinn ‌and Dawn Chmielewski

June ​12 (Reuters) - ​Roku Inc is exploring its strategic options, including a full sale of the company, according to six people familiar with the matter, amid interest from ‌companies seeking access to its vast streaming audience and advertising platform.

The ⁠company, whose shares jumped 22%, has held discussions with at least one U.S. media company about ‌a potential combination, though no final ‌decisions have been made on a potential sale, one source said. The company has also explored options including a private investment in public equity, or PIPE ​transaction, another source said.

Roku did not immediately respond to requests for comment.

Roku, which has a market capitalization of about $19.4 billion, produces streaming devices and Roku-branded ⁠TVs, distributes streaming services and operates a growing digital advertising business.

Its business is largely driven by advertising and ​subscription revenue from streaming apps on its platform. Advertising is the largest component, with revenue of $613 million in the first quarter, up ​27% year on year.

Roku also takes a ‌cut of subscription sign-ups to services such as Amazon and Netflix promoted on its interface, while pushing its own content offerings, ⁠highlighting a structural tension in its model.

The Roku Channel, its free ad-supported streaming service, has become a key growth driver, but it competes with other ad-supported platforms such as Fox-owned ⁠Tubi and Paramount’s Pluto TV. Roku last year partnered with Amazon to allow marketers to buy ​ads on the Roku Channel, even as Amazon promotes its own free streaming service on Roku’s platform.

The Roku Channel is the most-watched free streaming service on its platform, according to ‌Nielsen, but the segment is becoming increasingly crowded as traditional TV declines and more companies launch ad-supported offerings, analysts say.

Bloomberg News ‌first reported the sale talks.

Roku’s more than 100 million streaming households and the data ⁠it collects on viewing behavior could ‌make it attractive to ​potential buyers, including media, technology and advertising companies, the sources said.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Joyjeet Das and ‌Arun Koyyur)

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