Fox buys the box

The New York Times, on Fox Corp.'s $22 billion deal to acquire Roku:

Since the Disney deal, which slimmed down the family's media holding significantly, Fox Corp. has focused more narrowly on sports, news and entertainment, along with building up its streaming abilities. The deal with Roku will immediately put Fox Corp. into greater competition with other major providers of connected-TV devices, such as Comcast, which reaches internet and TV customers with proprietary software that binds Comcast to subscribers and provides it with valuable data. As the traditional cable business continues to erode, those devices make TV distributors a key link between customers and streaming services like Netflix and Disney+.

Buying Roku will allow Fox to own a piece of the infrastructure that powers a major chunk of the streaming business. Roku sells TVs that are powered by its proprietary operating system and owns the Roku Channel, a free, ad-supported channel for shows and movies. The company also makes audio devices and sells subscriptions to other streaming services, such as Peacock and Paramount.

The deal with Fox may test Roku's relationships with rival content companies like Netflix and Amazon, because Roku has thrived by establishing itself as neutral third-party in the entertainment industry. During the question-and-answer session, Mr. Wood said that Roku had experience in that arena, featuring the Roku Channel alongside streaming apps from other media companies.

Interesting move — and one that sits awkwardly with what made Roku valuable in the first place. A platform's strength is horizontal: it integrates with as many providers as it can and stays neutral among them, so every streaming service wants to be on the box. That neutrality is the product.

And the smart case for the deal depends on it. What Fox is really buying is scale: an audience large enough that advertisers have to buy in, built from hosting every service viewers want. That scale holds only as long as the rivals stay. So the bull case asks Fox to keep the platform neutral, which is the one thing its ownership gives it every reason to undo.