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Even as SXSW had a sunny and hot opening weekend, a Silicon Valley Bank-sized shadow hung over the tech and venture capital portions of the conference.

Why it matters: At times, it felt like a mass group therapy session, Kerry and Axios Austin's Asher Price write.

What's happening: On stage, startup executives and investors stared at their devices in the middle of their panels, and anxious questions about the collapse cropped up in Q&As.

Reign Ventures announced it was canceling its SXSW events because of the bank's failure. Executives dropped out of their scheduled in-person meetings to take private calls and manage the crisis.

Yes, but: SXSW wasn't entirely dour. Pre-planned parties and schmoozing among marketing and sales leaders carried on.

At a Friday night event hosted by TV streaming service Roku — shortly after it filed an 8-K form revealing nearly $500 million of its $1.9 billion in cash was tied up with SVB — the vibes still felt celebratory, with purple glitter drinks, purple snacks, lots of hugs and smiles.

Zoom in: Making the rounds at SXSW, "about half the people got their money out and half not. And the half that did not are sweating about not making payroll," Henrik Johansson, Austin-based CEO of Gembah, tells Axios. "The ones that did not are smiling and shaking hands — and also freaking out."

Johansson had banked with SVB for 15 years but was able to get his money out on Thursday after an urgent message from an investor. (He declined to disclose how much his holdings in SVB were.)

What's next: "If I were running a big tech company and had a lot of cash, I'd be looking for fire sales this week," Jason Schenker, the Austin-based chairman of the Futurist Institute, said during his SXSW session Saturday.

"Many companies can't meet their payroll," Schenker said. "You're going to see a very fast slew of acquisitions."

1 big thing: SVB collapse weighs on SXSW

Showtime's Yellowjackets activation at SXSW had a staircase reading "We're Not Out Of The Woods Yet."

Showtime's "Yellowjackets" activation. Photo: Kerry Flynn/Axios

Diamond Sports Group's 14-day grace period to resolve its debt expires this week with the expectation that the beleaguered company will file for bankruptcy.

Why it's the BFD: The future of regional sports networks hinges on Diamond's ability to emerge from this process without losing its rights to local teams, Tim writes.

 Driving the news: Diamond faces two deadlines on Friday of this week. 

Diamond has been working with its creditors and stakeholders on a restructuring plan, which includes a debt-to-equity swap, as part of a prearranged bankruptcy filing. It has to file by Friday, or risk defaulting on its debt.

Any plan would reduce, or even wipe out, Sinclair's ownership stake.

Additionally, Diamond has until midnight Friday to make its first payment to the Arizona Diamondbacks, or risk MLB going to court to take back those rights. Diamond is withholding payment to the Diamondbacks in order to get a more favorable deal that includes streaming rights, which MLB owns. 

MLB commissioner Rob Manfred has stated repeatedly the league is prepared to broadcast the Diamondbacks themselves, as well as any other team that the sports group can't afford to pay for anymore.

The big picture: Diamond's fate is tied to its ability to get streaming rights for the teams it currently airs on TV to prop up its Bally Sports+ streaming service. 

So far, Diamond has only been able to get rights to some of those teams. Major League Baseball has sought to keep its teams' digital rights to itself.

Editor's note: This story has been corrected to state that Diamond Sports Group had a 14-day grace period, not a 30-day grace period.

2. The BFD: Diamond preps for bankruptcy 

Photo: Mark Cunningham/MLB Photos via Getty Images

Multiple companies in the media space, including Roku and a payroll firm used by numerous Hollywood productions, were impacted by last week's stunning collapse of Silicon Valley Bank. 

Roku was one of the most vulnerable media companies affected by SVB's collapse. The streaming company informed investors Friday that it had $487 million with SVB, roughly a quarter of its overall cash. 

Roblox informed investors that SVB held around 5% of its $3 billion cash and securities balance as of Feb. 28, 2023, or roughly $150 million. 

Vox Media had a "substantial" amount of its cash reserved with SVB, and its credit cards from the bank stopped working on Friday, the New York Times reported.

Wrapbook, a payroll firm used by Hollywood, was temporarily delayed in processing its paychecks. However, the company told customers that it only had a small amount of its funding with SVB and was largely unimpacted. 

Vimeo stated in its own filing that its balance with SVB totaled less than $250,000, which means it will be insured by the Federal Deposit Insurance Corporation (FDIC). 

Quotient, the digital marketing firm that owns Coupons.com, disclosed that it held $400,000 at SVB's U.K. subsidiary, Silicon Valley Bank UK Limited.

3. SVB state of play

Illustration of a file foldler with a note that says "State of Play" paper clipped to it.

J.P. Morgan, PNC among suitors for SVB holding company (Axios)

"Apollo Management and Morgan Stanley are also part of the discussions around the holding company, the sources said. Apollo's interest is expected to center around financing a transaction or acquiring parts of the business, they added," Michael Flaherty reports.

U.S. regulators will protect all Silicon Valley Bank depositors to stem fallout (Axios)

"There will also be hard questions ahead about how midsize banks should be regulated now and whether the $250,000 cap on deposit insurance has any meaning, given the authorities' action," Neil Irwin and Courtenay Brown write.

How Silicon Valley Bank's collapse played out for one startup CEO (Axios)

"Since her company always preaches diversification to clients, last summer, as the economy grew stormy, [Eliza] Arnold had moved to split Arnie's finances among a number of banks," Ina Fried writes.

Silicon Valley Bank failure spooks digital health, biotech industries (Axios)

"These are not just some random tech bros," Ethan Perlstein, CEO of rare disease biotech Perlara, told Axios. "Regular depositors at SVB were trying to change the world. ... Yes, we didn't do our due diligence on the bank because ... we were busy building medicines."

"When a bank fails, depositors are made whole by the FDIC insurance fund. The insurance only covers deposits up to $250,000, although there are plenty of workarounds that allow depositors to effectively buy much more FDIC insurance than that," Felix Salmon writes. 

4. Channel surfing: All about SVB

Illustration of a digitized bank building with arms shrugging.

Spill, a social app founded by a laid-off Twitter employee, could be seen as this year's SXSW darling. 

Why it matters: The team behind the Twitter alternative has been cultivating a community and exploring partnerships during early testing.

Details: SXSW darlings are apps that exploded in popularity at the conference, such as Twitter, Foursquare and Meerkat. Spill hasn't publicly launched, but its handle registration page was displayed at Culture House, an unofficial SXSW event about a 20-minute drive from the conference center.

Spill CEO Alphonzo "Phonz" Terrell spoke on a panel there, alongside Spill investor MaC Venture Capital's Marlon Nichols and marketing expert Marcus Collins. Spill has raised $2.75 million in a pre-seed round, the company announced in January. 

"At the end of the day, what we want to build is a place that's fun," Terrell tells Kerry, speaking together earlier in the day at Soho House Austin. 

"The demand part isn't the thing we're the most concerned about," he says. "Everybody's trying to do a new thing, and they have a hot moment and then you don't hear about them. For us, it's been really about the community piece."

Spill CEO promotes his Twitter alternative app at SXSW

5. 1 fun thing: Spilling on Spill

MAC Venture Capital's Marlon Nichols, Dr. Marcus Collins and Spill's Alphonzo Terrell sitting in chairs on a stage

MaC Venture Capital's Marlon Nichols, Spill's Alphonzo Terrell and marketing expert Marcus Collins. Photo: Kerry Flynn/Axios

• Mythic, a Round Rock, Texas-based AI chip startup, raised $13m led by Atreides Management, DCVC and Lux Capital with Catapult Ventures and Hermann Hauser Investment. https://axios.link/3JoSo67

• Bach, a Philadelphia-based group trip planning app for booking experiences, chatting with guests and curating social media posts, raised $9m in Series A funding led by Pritzker Group VC. https://axios.link/3J3ZVae

• APX Group, the U.S.-Europe media fund, completed its acquisition of a 50% stake in Twickenham Film Studios ahead of a planned public listing on NYSE later this year. https://axios.link/3LfnrUp

• Meta said it's exploring strategic alternatives for Kustomer, an enterprise customer service SaaS provider for which it paid $1b to acquire last year. https://axios.link/3ZFARgQ

• ⚽️ Paris Saint-Germain, the French soccer club, is interested in buying Stade de France, the country's largest sports stadium, with a value of around €600m. https://axios.link/3ZYTEmK

• Hybe, the South Korean entertainment company behind BTS, called off its takeover bid for K-pop agency SM Entertainment. South Korean technology firm Kakao said it will continue to pursue its tender offer, per Variety. https://axios.link/3yySmU1

• Sunfire Acquisition, a TMT SPAC formed by GLD Partners, withdrew registration for a $100m IPO. https://axios.link/3ZDONrt

6. Deal flow

• Gadi Schwartz will anchor "Stay Tuned NOW," a new primetime streaming program on NBC News NOW, Russell Contreras writes. https://axios.link/3Fm9twe

• Reddit hired former Twitter exec Sarah Rosen as senior director of content partnerships. https://axios.link/3yBlkCA

7. Movin' on up (or out)

Good morning, Media Deals readers! SVB is everywhere, but there was the small matter of the Oscars, too.

🏆 Situational awareness: "A24 took home more awards (nine) than any other movie studio Sunday, marking a significant milestone in its journey from a fledgling indie studio to an industry juggernaut," Sara Fischer writes.

@tim_bays: "The Goonies." One of those kids is now an Oscar winner.

@kerrymflynn: "Endless Summer Vacation" on Apple Music. Miley's new album is on repeat as I run between SXSW events.

✏️ Thanks to George Moriarty for editing and Katie Lewis for copy editing this newsletter.

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March 13, 2023

1 big thing: SVB collapse weighs on SXSW