Controversial Couples: Elon and Epstein, Microsoft and Activision, Fanatics and PointsBet
Tuesday, May 16th, 2023
1. Elon Musk Caught in U.S. Virgin Islands' Web of Jeffrey Epstein Lawsuit.
The U.S. Virgin Islands is pulling out all the stops to drag Elon Musk into their lawsuit against JPMorgan Chase, hoping the Tesla CEO has some connection to the notorious sex trafficker Jeffrey Epstein. Authorities suspect that Epstein may have tried to lure Musk as a client for JPMorgan, and they're demanding documents that reveal any communication between Musk, JPMorgan, and Epstein, along with germane details about Epstein's illegal endeavors. The U.S. Virgin Islands claims that JPMorgan shamelessly profited from Epstein's sick escapades on his private island, and they're not buying the bank's denial. To add to the circus, subpoenas have been flying left and right, targeting big shots like Google's Larry Page. JPMorgan CEO Jamie Dimon is about to enter the legal hot seat.
2. Vice Files for Bankruptcy After $6 Billion Valuation Because Numbers Are Hard.
Vice, the former $5.7 billion media powerhouse (because those valuations always hold up), has filed for bankruptcy, with lenders Fortress Investment Group, Soros Fund Management, and Monroe Capital purchasing the company for a paltry $225 million. Facing the struggles of the digital media industry, Vice's financial troubles stem from management missteps during the "pivot-to-video" era and allegations of a toxic work environment. Oops, turns out "bro culture" isn't a recipe for success. But fear not, their knight in shining armor, Founder Shane Smith, bravely stepped down amidst sexual harassment claims and of course, subsequent leadership changes were like a well-choreographed circus act. With a staggering $834 million debt, Vice will receive financing from lenders to continue operations during the sale process, hoping to emerge stronger after shedding legacy liabilities. The downfall of Vice adds to the recent closures and layoffs at BuzzFeed News and MTV News, painting a grim picture for the industry.
3. Microsoft's Gaming Monopoly Marches On: EU Approval Paves the Way
The European Union (EU) has approved Microsoft's proposed $69 billion acquisition of gaming firm Activision Blizzard, subject to remedies offered by Microsoft. This decision comes after the UK's Competition and Markets Authority blocked the deal last month due to concerns about reduced competition in the cloud gaming market so the EU's approval is seen as a significant win for Microsoft. It also leaves us wondering about whatever backdoor deal must have gone down between Microsoft and the EU to get this approval. The company faced opposition from regulators and rivals, including Sony, the maker of PlayStation games consoles. Jealous much, Sony? The EU's decision increases competition in the market and allows streaming platforms that previously did not have access to Activision games to now have them. Microsoft still needs to convince other regulators, such as the US Federal Trade Commission (FTC), that the acquisition will not harm competition. The case between the FTC and Microsoft is still ongoing.
4. Biotech Company Experiences 25% Surge in Share Price as 57% of Panel Agrees on Gene Therapy.
Sarepta Therapeutics, a biotech company that specializes in the development of precision genetic medicines to treat rare diseases, had its share price surge by 25% after a panel of advisers to the US Food and Drug Administration (FDA) backed the company's gene therapy for Duchenne muscular dystrophy (DMD), a muscle-wasting genetic disorder. Eight out of 14 advisers voted in favor of granting accelerated approval for the therapy. It's always a good sign when you can get eight out of 14 people to agree on something. The positive vote increases the likelihood of accelerated approval and contributed to a potential $3 billion increase in Sarepta's market capitalization. The FDA is expected to make a decision on accelerated approval by May 29; we wait with bated breath for the FDA to potentially approve a therapy that could cost thousands of dollars per patient. Yippee!
5. Fanatics' Power Play: Smaller Players Can't Handle the Heat, Cash Out or Get Crushed
Fanatics Betting and Gaming, the ultimate fanboy-turned-gambling tycoon, has snagged PointsBet's US sports gambling business for $150 million. With their newfound power, Fanatics plans to spread their sportsbook tentacles across more than 15 states, bringing the thrill of online gambling to the masses. It's a harsh reality check for smaller players in the industry who are drowning in the shadows of giants like FanDuel, DraftKings, Caesars, and BetMGM. For example, FanDuel and DraftKings have a serious chokehold on New York's gambling scene, raking in over 80% of market share. So in a valiant attempt to keep up, PointsBet decided to cash out and wave the white flag. It seems like the sports betting industry is finally growing up, trying to be all responsible and mature.