Welcome back to Dry Powder. I’m Bill Cohan.

In today’s issue, a close look at the Battle of the PowerPoints as the Paramount special committee of the board of directors has to decide between the Ellison/RedBird bid for Shari Redstone’s company, or the 13th-hour offer from an investor group led by Edgar Bronfman Jr. Around and around we go…

But first…

• My partner Marion Maneker on Christie’s $25M Monet in Hong Kong: Christie’s just announced they’re opening their new Hong Kong premises with the sale of a $25 million Monet, a nymphéas—or water lilies—painting from 1897-99, on September 26. Small-ish in size—just a little more than 2-by-3 feet—the painting is a vivid example of the first series of nymphéas that Monet painted in his garden at Giverny. Later, the canvases would get much bigger, using different compositions of flowers, colors, and light.

  Half of the paintings are held in museums like LACMA, the Musée Marmottan in Paris, Kagoshima City Museum of Art, and Rome’s National Gallery of Modern Art. This work is one of the four still in private hands, and it has never been auctioned. It’s also stamped, which means it was never sold during Monet’s lifetime.

• And now here’s Dylan Byers on a Washington Post ‘momentum shift’?: Will Lewis says “an interesting momentum shift is underway” at The Washington Post. In a staff memo on Friday, the beleaguered and nearly defenestrated C.E.O. noted that the last seven weeks have delivered “a sustained period of positive net subscriber growth for the first time since February 2021.” Welcome news.

  Also notable is the shift in Lewis’s newsroom diplomacy. “It is crucial that we continue to build on these improvements,” he wrote. “All of us in the media industry continue to face significant headwinds and we must keep building on our strong journalistic foundations, serving our customers in engaging ways with news and opinions they can’t get elsewhere, at the same time as making bold moves, adapting, and, importantly, growing.” … We’ve come a long way from “people are not reading your stuff!”

That’s hardly true, of course, but our anonymous friend claimed to own around 700,000 Paramount Global Class B shares, worth around $8 million these days, and to have worked with private equity to found three biotech companies. In other words, he wanted me to know, he is no rube. And he was deeply frustrated that most of Hollywood, Wall Street, and the media seem to take Ellison so much more seriously than Bronfman, especially when the Ellison deal contains a provision whereby Paramount Global would have to buy Skydance Media, Ellison’s production company, for $4.75 billion in stock, a combination with Paramount’s studio that our friend worries would be “dilutive” to shareholders.

I think this is hogwash, for a number of reasons. But for the sake of argument let’s attempt to take seriously Edgar Bronfman Jr. and his rival $6 billion offer, which is laid out in a pitch deck to prospective investors that has been making the rounds on Wall Street.

Things went south fast, and Bronfman wound up leaving the company. (GE eventually bought parts of Universal from Vivendi to form NBCUniversal, and then sold the business to Comcast after the 2008 financial crisis.) A few years later, Bronfman bought the Warner Music Group, among other companies, for $2.6 billion, and eventually sold it to Len Blavatnik, claiming to generate an internal rate of return of 39 percent during his seven years of ownership.

In his proposed deal for Paramount, Bronfman would essentially step into Shari’s shoes by buying NAI, for the same $1.75 billion in cash that Ellison has offered, plus the same refinancing or repayment of the $650 million of debt and preferred stock at the NAI level, according to the Bronfman deck, which my partner John Ourand first reported in detail for Puck. Just like Ellison, Bronfman is also offering to inject another $1.5 billion into Paramount Global to pay down a portion of the company’s $12.2 billion of net debt.

At that point, a few differences in deal structure emerge. First, Bronfman is offering up to $1.5 billion to buy Class B Paramount shares for $16 a share plus also another $250 million, or so, to buy a bunch of the non-Redstone Class A shares, such as the ones that investor Mario Gabelli still owns. Bronfman later appeared to amend that proposal by offering $3.2 billion, first to buy non-Redstone shares at $16, and then to pay down debt. So it’s not clear if he still intends to inject capital to pay down debt, or if he is only paying down debt if shareholders don’t tender.

By contrast, Ellison and his financial partner, Gerry Cardinale’s RedBird Capital, have offered to buy $4.5 billion of non-Redstone shares, through a $15-a-share tender offer for the Class B shares, plus a portion of the non-Redstone Class A shares. In other words, Ellison/RedBird has offered to buy three times as much non-Redstone Paramount stock as Bronfman, at a slightly lower price, plus pay down Paramount’s debt.

Another layer of complexity: If Bronfman gets the deal, he’ll have to pay the $400 million breakup fee to Ellison/RedBird. He’s also circling $120 million in fees to his legal and financial advisors, which include Perella Weinberg, the M&A boutique, and UBS, the behemoth Swiss bank, as well as Rockefeller Capital Group and Wall Street law firm Skadden Arps.

It’s not clear from the investor deck what Bronfman plans to do with the three executives now running Paramount Global, who have occasionally been called the “Pep Boys” on Wall Street: George Cheeks, Brian Robbins, and Chris McCarthy. But in addition to touting his own prowess as an executive—“Edgar Bronfman Jr. has a proven history of building long-lasting management teams and looks forward to continuing that at Paramount,” the deck boasts—he’s also bringing into the picture a puzzling crew: Jon Miller, a former AOL C.E.O. and the C.E.O. of Integrated Media, a digital media investor, who was previously a partner of Shari Redstone’s at her venture capital firm, Advancit. (TPG, an investor in Integrated Media, is also an investor in Puck.)

Bronfman is also touting the management expertise of Steven Paul, the Bratz and Baby Geniuses producer who was supposedly trying to make his own deal for NAI, and John Martin, the former C.E.O. of Turner Broadcasting and a former C.F.O. at Time Warner and Time Warner Cable. Martin left after AT&T took control, a lifetime ago in the industry.

When all is said and done, Bronfman, who has been performing due diligence on Paramount for about a month now (versus about a year of study for Ellison/RedBird), is promising that his recapitalization of Paramount—which, like Ellison’s deal, would leave Paramount as a publicly traded company—will result in a stock price in excess of $40 a share by 2026, along with an increase of $4 billion in “adjusted EBITDA” to $7 billion, also by 2026. (That’s quite a series of claims.) He is also considering the sale of BET, for $1.6 billion, and the sale of the Paramount lot, on Melrose, for as much as $2.5 billion. He’s promising $4 billion in “cost savings” and “EBITDA enhancements,” whatever that means, that “positions Paramount as a long-term winner.”

In effect, what the special committee of the board of directors of Paramount will have to decide is the Battle of the PowerPoints. If they determine that Ellison/RedBird has a better chance of achieving long-term shareholder value for the non-Redstone Paramount shareholders, then the special committee won’t change its recommendation by September 5, following the 15-day extension of the “go-shop” period in the Ellison/RedBird contract, and Ellison/RedBird will finally prevail. If it determines that Bronfman offers better long-term value to shareholders, then it will probably muster the courage to change its recommendation. Of course, even if that were to happen, Ellison/RedBird would have the option to increase their offer to outbid Bronfman. And around and around we go…

In my mind, the only thing that should matter to the non-Redstone shareholders, and therefore to the special committee, is which buyer is more likely to improve the Paramount stock price the fastest in the future. A secondary consideration is which buyer is offering more value to the non-Redstone shareholders today. The latter question is easier to answer: The advantage goes to Ellison/RedBird. It is offering $4.5 billion in its tender offer, at $15 a share, as compared to Bronfman, who is offering $1.5 billion, at a slightly better $16 a share (or as much as $3.2 billion if Bronfman decides not to pay down any Paramount debt). More cash will end up in the hands of the non-Redstone shareholders, if they want it, under the Ellison deal than under the Bronfman deal. Non-Redstone shareholders will get three times more cash from Ellison than they will from Bronfman (and that’s before the Ellison-RedBird team decides to increase its offer to $16 a share to match Bronfman, if it does).

I also like the proposed combination of the Skydance and Paramount movie studios. Bigger is often better in Hollywood, especially when costs can be removed and there’s more leverage to be used. Paramount on its own won’t be much of a competitor. Why would that be any different with Bronfman stepping into Shari’s shoes? As for the much touted “digital transformation” that both teams are promising, who knows? But I’ll also take David Ellison, and RedBird’s Jeff Shell and Jeff Zucker, if he decides to run CBS, over Bronfman and his slate, who seem at best like heroes of another age. Old Wall Street hands will never forget what Edgar Jr. did to his family’s Seagram’s fortune, which has lost billions of dollars in value.

There are other problems with the Bronfman deal, as well. For instance, what spooked Bain, which was supposed to be Bronfman’s primary source of capital? Where are the commitment letters from Bronfman’s financiers and equity investors? Nor has Bronfman worked with Paramount’s existing creditors to provide lender consents to the transaction. There is also obviously no signed and agreed deal with Bronfman, which takes time to do and would obviously restart the regulatory approval process, delaying the deal further.

Then there is the potential CFIUS problem related to the investor group that Bronfman has assembled. Foreign investors cannot own a broadcast network such as CBS. The F.C.C. will also have a problem with the foreign ownership. Why then assemble a group that includes Bronfman, who is Canadian (it’s unclear how much he will actually be investing here) and Fortress Investment Group, a hedge fund 91 percent owned by Mubadala Investment Company, the Abu Dhabi sovereign wealth fund, which is supposedly joining forces with a British Columbia pension fund to invest $1.1 billion?

Other supposed Bronfman investors include a guy named Keith Frankel, an operating partner at MidOcean Partners, the buyout firm, for $1 billion; Simon Falic, the billionaire owner of a group of duty-free shops (and a close friend of Benjamin Netanyahu), for $600 million; Alan Mruvka, a founder of the E! Entertainment channel, for $250 million; Brian Koo, a scion of the LG Electronics dynasty, for $300 million; John Paul DeJoria, the founder of Paul Mitchell hair products, for $600 million; Stephen Paul, the Hollywood producer, for $100 million; and Richard Tsai, the Taiwanese billionaire, for $500 million. Frankly, I don’t see how an investor group composed of this many foreigners can end up controlling CBS. That’s a question I’d like to hear an answer to from Bronfman’s advisors at Perella Weinberg, UBS, Rockefeller Capital, and Skadden Arps.

As for the rest of Bronfman’s motley crew of potential investors: I’ve never heard of many of them, including the child actor turned crypto mogul Brock Pierce. I do know and respect Jeff Ubben, the hedge fund manager; his involvement is somewhat comforting but can’t overcome my concern about Bain walking and the risk that CFIUS will block the bid if it somehow prevails. (Bronfman also included another list of potential equity sources that includes the likes of Blackstone, Ares, Tony Ressler, and Marc Lasry, among others. We’ll see.)

There is also the legal salvo from Latham & Watkins, Ellison/RedBird’s attorneys, claiming that the special committee should not have extended the go-shop period to further consider the Bronfman bid. Latham argues that if the special committee fails to terminate the Bronfman deal, Paramount will have “committed an incurable, material breach” of the agreement between Ellison/RedBird and Paramount. I’m not a lawyer, obviously, and don’t know if they have much of a legal argument. To me, though, the special committee, which contacted some 50 parties during the go-shop period only to come up with Bronfman, should be given the leeway to fully explore his rival bid to its conclusion, one way or the other. Doing so will give the committee additional legal protection from inevitable shareholder lawsuits. Sure, it’s a bit of a “cover your ass” move, but that’s what special committees are for.

The Hollywood ending for this nutty transaction has yet to be written. But Centerview, which will earn a fee likely in the range of $60 million, wins either way.