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 of the sources said. The company has also explored other 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 at the same time 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.
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.
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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