Let's elaborate. <FILE> in scalar context will only read one line. By default, that means it will only read until (and including) the next \n. How can a line match \w+\n\n\w+ if a line can't contain \n other than at the end?

The fix would be to read the whole file in at once, as follows:

my $text;
{
   open(my $test_fh, '<', 'testfile)
      or die "Unable to open testfile: $!\n";

   local $/;  # Read to end of file.

   $text = <$test_fh>;
}

if ($text =~ /\w+\n\n\w+/) {
   print "reading file test:\n$text\nmatches.\n";
}
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Note: The m modifier on your regexp is useless since you don't use ^ or $. The s modifier on your regexp is useless since you don't use ..

Update: If you want to find all matches, use the following:

...

while ($text =~ /\w+\n\n\w+/g) {
   print "reading file test:\n$text\nmatches.\n";
}
[download]