By Christiana Sciaudone
Investing.com — Roku (NASDAQ:ROKU) jumped as analysts lauded its purchase of “This Old House.”
Needham called the acquisition a “clever move” and JPMorgan (NYSE:JPM) sees new revenue streams, as it allows Roku to sell ads against specific content across platforms. Shares are up 3.6%.
Roku said Friday it acquired the “This Old House” business, including global distribution rights and all of its subsidiary brands, digital assets and the television production studio. No value was disclosed, but JPMorgan believes Roku paid between $50 million and $75 million.
Roku has already had a strong run amid the pandemic, reporting fourth quarter revenue of $650 million — a record for the period, and an increase of almost 60% from a year earlier. Shares hit an all time high late last month and have since dipped about 25%.
“This Old House” and “Ask This Old House” were the two top-rated home improvement programs in the U.S. in 2020, according to Nielsen data, Roku said in a statement last week.
“As the top-rated home improvement programs in America, ‘This Old House’ has the broad appeal that is perfectly suited to support The Roku Channel’s ad-supported growth strategy,” said Rob Holmes, vice president of programming at Roku.
The biggest brand advertisers buy specific content, usually in July, when 70%-80% of their ad budgets are committed each year. By owning Quibi content plus 1,500 hours of “This Old House” content, Roku may have better luck getting commitments from brands during the upfront market, instead of fighting for the 20% of their ad budgets the rest of the year, Needham’s Laura Martin said in a note, according to StreetInsider.
Owning content that runs on their services provides the company with a new source of off-platform ad inventory, said JP Morgan’s Cory Carpenter, StreetInsider reported.
“We think it makes sense for Roku to experiment with different content monetization strategies early on, offering some content exclusively on TRC (i.e. Quibi) while monetizing other content across platforms (i.e. This Old House),” Carpenter said.
Roku Jumps as ‘This Old House’ Acquisition Applauded
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