Roku Says News Corp., BSkyB Join Investors Providing $45 Million

Online Video Service Will Use Cash to Expand Internationally and Add Features to Its Set-Top Boxes

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Roku, the closely held online video service, said British Sky Broadcasting Group and News Corp. are among investors pledging $45 million in a new round of equity financing.

With the investment, News Corp. Chief Digital Officer Jonathan Miller will become a company director, Saratoga, California-based Roku said today in an emailed statement. Other terms weren't disclosed.

Having the media companies as investors will help Roku gain influence with film and TV producers, CEO Anthony Wood said in an interview. The company will use the cash to expand outside the U.S., advertise and add features to its set-top boxes, which access services including Netflix, Hulu and Pandora via the internet, he said.

"More than money, this is about partnerships," Mr. Wood said. "This boosts our credibility in terms of the mainstream industry, large media and content companies, endorsing our platform."

Menlo Ventures and Globespan Capital Partners, venture-capital firms with prior investments in the company, also participated in the fifth round of financing, Roku said. In four previous rounds, the company raised $32 million, Mr. Wood said.

A strategic investor the company didn't identify also contributed, according to the statement. News Corp. owns 39% of BSkyB, the Middlesex, U.K.-based pay TV service.

Roku is now available in markets including the U.S., Canada and the U.K. With the funds, an initial public offering of Roku shares becomes less likely, Mr. Wood said.

"The financial need for an IPO isn't driving us," Mr. Wood said. "We think about it but there's no firm plans."

Revenue this year at Roku, which began selling devices at Best Buy Co. and other retailers in 2011, will be "quite a bit higher" than last year's $100 million, Mr. Wood said.

Apple is Roku's biggest competitor, Mr. Wood said. About 95% of internet-connected set-top boxes in the U.S. are either Roku or AppleTV devices, with the companies having roughly equal shares, Mr. Wood said.

"This will provide more money to grow the business, for advertising and to grow the brand," Mr. Wood said. "Market share is important."

--Bloomberg News--

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