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Simon & Schuster's future is now up in the air, which could open it up to acquisition talks, Kerry writes.

Driving the news: After considering the testimonies from the three-week trial in August, a federal judge yesterday blocked Penguin Random House's acquisition of the rival publishing house.

Why it matters: The decision aligns with the Biden administration's push for antitrust enforcement and sets a precedent for M&A at large.

It also leaves Paramount Global, the owner of Simon & Schuster, without the $2.2 billion payday it had expected and with an asset it doesn't want. 

Catch up quick: A year ago, the Department of Justice filed a lawsuit alleging the deal violated antitrust law.

The deal ⁠— announced two years ago ⁠— was part of Paramount's broader effort to offload non-core assets and focus on streaming. 

The judge ruled that the deal would "substantially lessen competition" for authors, meaning the combined company would act as a monopsony.

What they're saying: Stephen King had a great Halloween. 

The author, who had testified against his own publisher, tweeted yesterday, "The proposed merger was never about readers and writers; it was about preserving (and growing) PRH's market share. In other words: $$$."

What's next: All three parties — Penguin Random House, Simon & Schuster and Paramount — issued separate statements yesterday that they were seeking "an expedited appeal." 

💭 Kerry's thought bubble: If an appeal isn't granted, Paramount will likely seek another buyer. But the ruling could dissuade another one of the Big 5 or any other book publisher from bidding. That signals an opportunity for private equity.

Simon & Schuster could need buyer after Penguin Random House blocked

1 big thing: Book publisher merger gets axed 

Illustration of a gavel on a book instead of a block.

Spry Fox, a Seattle-based cozy game developer, became Netflix's fourth gaming studio acquisition since the streaming giant launched its gaming business a year ago. 

Why it's the BFD: Netflix built up its streaming business by paying studios to stream their content. With gaming, it's now just buying those studios outright, Tim writes. 

The big picture: Netflix's gaming push has been slow going so far — just 1% of subscribers are engaging with the games on a daily basis, according to a recent study.

Acquiring a studio like Spry Fox — which is in the "cozy games" genre with games like Triple Town, Alphabear and Cozy Grove — is part of its strategy of appealing to multiple types of gamers.

Earlier acquisitions include Night School, Next Games and Boss Fight. Netflix has also opened in-house studios in Helsinki and Los Angeles.  

During TechCrunch Disrupt, Netflix gaming chief Mike Verdu said the streamer was "seriously exploring a cloud gaming offering," similar to Google's just-shut-down Stadia and Amazon's Luna. 

💭 Thought bubble: Axios Gaming's Stephen Totilo says these are veteran mobile specialists, so this tracks with the mobile-centric game strategy Netflix has launched with.

After Google bailed early on the studios it acquired or was building, its Stadia service was all but doomed. Exclusive content, after all, is essential to a  platform's success. 

Netflix's more patient approach is more promising for players, for Netflix and for anyone running a small studio who might be looking for a buyer.

2. The BFD: Netflix continues games-buying spree

Illustration of an 8-bit video game screen with a Netflix logo.

Data: Yahoo Finance; Chart: Tory Lysik/Axios Visuals

This year is looking unhappily like 2000 for the tech industry, Scott Rosenberg and Sara write.

The big picture: In both this year and 2000, tech stocks took a tumble in the spring after peaking in the stratosphere. 

Then six months later, with a recession looming, big companies started cutting payrolls and startups began measuring burn-rate runways.

3. Charted: Tech's 2000 flashback

Shibasish Sarkar-led SPAC International Media Acquisition Corp is acquiring India-based Reliance Entertainment Studios and Risee Entertainment in a $140m deal. https://axios.link/3Uhjy2B

CVC Capital and Blackstone are eyeing Group Black's bid for digital media assets, including BDG Media, Sara scoops. https://axios.link/3SSTnhp

Journey, a web3-based design firm, acquired creative agency Squint Opera. https://axios.link/3gPuZQm

Jack Dorsey retained a 2.4% stake in Twitter after Elon Musk completed his $44b acquisition. https://axios.link/3TWwNpp

The Dodo's unionized staffers voted unanimously to ratify a new two-year contract with Vox Media. https://axios.link/3SOlyhu

Disney renewed its ABC affiliations across all Sinclair stations into 2026. https://axios.link/3FAjrLh

4. Deal flow

Amazon officially named Warner Bros. veteran Sue Kroll as head of marketing for Amazon Studios, after much speculation. https://axios.link/3zxn94q

UTA hired Fremantle's Samantha Glynne to oversee an EMEA branch of its Entertainment and Culture Marketing group. https://axios.link/3SSJOzd

Infillion appointed Margaret Chu as CFO. She already had been working as an executive adviser. Prior, she was CFO at Vox Media. https://axios.link/3DNcNjo

WSJ hired Lillian Thomas as a U.S. news bureau chief. https://axios.link/3gWmlzI

Sarah Rappaport moved from Bloomberg TV to be a U.K. correspondent for Bloomberg Pursuits. https://axios.link/3SVNX5p

5. Movin' on up (or out)

Hallmark Channel coming to Peacock in wide-ranging streaming deal (THR)

"The deal with Hallmark is a rare streaming deal with a third-party for Peacock, which has mostly built its service using content developed in-house at NBCUniversal," Alex Weprin writes.

Amazon getting into sports-talk business with 12-hour 'Moneyball' lineup (NY Post)

"The seven shows, debuting [today], will feature a variety of hosts, including Cari Champion, Master Tesfatsion and Rennae Stubbs. Airing for free over Amazon Prime Video and its other audio and visual platforms, 'Sports Talk' is going to try to zig a little as the ESPNs and the FS1s hot-take all day," Andrew Marchand writes. 

EU to launch advanced Microsoft-Activision probe (Politico)

"Microsoft had a deadline of midnight [yesterday] to submit commitments placating the concerns of the EU's competition department, but the company chose not to do so. ... The European Commission has a deadline of November 8 to formally announce its intention to launch a so-called Phase 2 investigation into the deal," Samuel Stolton writes. 

6. Channel surfing

Illustration of a surfer with a television in the place of his head.

🐦 Situational awareness: Twitter's chief customer officer Sarah Personette tweeted today that she's leaving the company. That means nearly every top Twitter exec is gone days after Elon Musk's takeover, Sara Fischer writes.

@tim_bays: "The Peripheral" on Amazon Prime Video. Confusing science-fiction series from the people behind another confusing science-fiction series? Sign me up. 

@kerrymflynn: "Weird: The Al Yankovic Story" at Alamo Drafthouse. Congrats to my bff Daniel Radcliffe.

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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November 01, 2022

1 big thing: Book publisher merger gets axed