Media giant Fox is buying streaming firm Roku in a deal the companies say will create the third-largest player in US TV by share of viewing.

Fox's move is being seen as a bet that combining streaming with its news and sports offering will leave it in a strong position as TV audiences move online.

The offer of $160 per share, made up of cash and stock, values Roku at $22bn (£16bn).

"This is a defining moment for Fox, and a natural extension of the deliberate and focused strategy we have been executing for nearly a decade," said Fox chief executive Lachlan Murdoch.

"In 2019, we reoriented the company around live news and sports. In 2020, we acquired Tubi, and under our stewardship, it has become one of the most successful streaming businesses.

"Today, we take the next step: bringing together the most valuable live content portfolio in video consumption with the preeminent streaming platform through which America watches it."

Roku is the largest streaming platform for smart TVs in the US, powering more than a quarter of internet-connected devices, according to research firm Parks Associates.

It was one of the first companies in the US to bring streaming services to mass audiences, with its operating system offering users access to apps such as Netflix and Amazon Prime, as well as its own channel.

Its TVs, for example, can be loaded with rival services, but also its own channel.

Globally, more than 100 million households stream with Roku. Its main rivals include Amazon's Fire TV, Google TV and Chromecast, Apple TV and Tizen.

Roku also has a streaming service for films, TV shows and live news, the Roku Channel. Under the takeover, this will combine with Fox's own streaming service, Tubi, to rival Netflix and Amazon as one of the biggest streaming services in the US.

Roku's own productions include The Reunion: Laguna Beach, a reunion special of the MTV reality series, which ended in 2006, as well as Honest Renovations, a renovation show hosted by Jessica Alba and Lizzy Mathis.

The tie-up comes as advertisers are spending increasing amounts on streaming platforms, with the consultancy Madison and Wall predicting $20bn in spending by 2029, only slightly less than it expects to be spent on traditional TV advertising.

Fox's and Roku's scale after the takeover is expected to help the company compete for advertisers' spending.

Announcing the deal, Fox highlighted the shift away from set viewing times for hit TV shows in favour of streaming instead. But it stressed "the enduring primacy of live sports and news".