Fox Corp. jumped into the direct-to-consumer arena, announcing an anticipated deal to acquire Tubi – a leader in the fast-growing free ad-supported streaming category – for about $440 million in net cash consideration. Fox said the deal underscores its “long-term strategic initiatives to broaden and enhance direct-to-consumer digital reach and engagement.”

It’s paying for the acquisition using cash from the sale of a minority stake in Roku.

Tubi brings Fox an expanded consumer offering with a sizable, younger-skewing and directly connected user base that spends over 160 million hours per month watching content on the service. Tubi is available on more than 25 digital platforms in the U.S. with some 20,000 titles and 56,000 hours of film and episodic television programming from over 250 content partners.

Fox plans to continue to run Tubi as an independent service and said it will evaluate opportunities to expand its offering – not through original content but in a “more cost-effective manner by leveraging our expertise in national and local news and sports programming.” Tubi founder and CEO Farhad Massoudi will continue to lead the service.

“Tubi will immediately expand our direct-to-consumer audience and capabilities and will provide our advertising partners with more opportunities to reach audiences at scale. Importantly, coupled with the combined power of Fox’s existing networks, Tubi provides a substantial base from which we will drive long-term growth in the direct-to-consumer arena,” said Fox CEO Lachlan Murdoch.

Said Massoudi: “Fox Corporation’s relationships with advertisers and distribution partners, combined with the company’s dominance in news and sports programming, will help Tubi continue to grow and differentiate itself in the high-growth ad-supported streaming marketplace. I am proud of what the team has already accomplished here at Tubi and we couldn’t be more excited about joining such a fast-moving, entrepreneurial company. We look forward to working together with Fox to accelerate Tubi’s leadership position in the market and bring new competencies to Fox.”

Fox said it will finance the Tubi acquisition principally with the net proceeds from the completed sale of its stake in Roku. In doing so, FOX preserves its balance sheet capacity by essentially exchanging a passively held minority investment for full ownership and control of a leadership position in the free ad-supported streaming market.

On Roku, Murdoch said, “We were an early investor in Roku and continue to admire the ongoing accomplishments of Anthony Wood and his team. We are pleased to expand our partnership with them as a result of the Tubi acquisition.”

The Tubi is expected to close by the end of June.

Allen & Company is acting as financial adviser to Fox with Jenner & Block and Kirkland & Ellis as legal advisers in the transaction. Qatalyst Partners is acting as sole financial adviser to Tubi, and Fenwick & West is legal adviser.