Happy Sunday and welcome back to Dry Powder.

In tonight’s email, some thoughts for David Ellison and the RedBird guys regarding Shari’s final deal point, and how this arduous M&A process might finally get across the finish line. Plus, notes on the latest meme stock inanity and the tug of war over Elon’s $56 billion pay package.

But first…

• Revisiting the Charlie Rose saga: A quick plug for my friend Reah Bravo’s new book, Complicit: Why We Enable Misbehaving Men, which chronicles in startling detail her stint as an associate producer for Charlie Rose and the crap she had to put up with—literally. In one chapter, she recounts how Rose once “asked that I unclog the toilet in the master bedroom of his Bellport home.” Incredibly, she recalls, the assignment “came with the oddest sense of happiness” because, she reassured herself, “No man would ask this of a woman with whom he wanted to have sex.” The book, out June 18, is absolutely worth a read, especially as Rose, rather than capitulating to his cancellation, has continued to interview the likes of Warren Buffett and Ray Dalio for his personal website.

And a brief update on the Christie’s hack from Marion Maneker…

• We told you there would be lawsuits…: Plaintiff’s law firm Milberg Coleman Bryson Phillips Grossman has filed a class action suit against Christie’s, estimating that as many as 500,000 individuals might have had their data exposed in the recent hack of the auction house. (Wouldn’t it be great if there were actually that many active collectors in the art world?) Efstahtios Maroulis, who also seems to go by Steven, is the plaintiff in the suit, which would appear to be an opening gambit by a firm well-known for its activities in the class action space. Don’t expect anything to happen quickly or put too much stock into this case just yet. There’s a long way to go before taking it seriously.

It’s at moments like these in an arduous M&A process when one of the last lines in The Shawshank Redemption pops into my head. Perhaps you know the scene. Red has been paroled, and finds Andy Dufrense’s note in the corner of a Maine cornfield: “If you’ve come this far, maybe you’re willing to come a little further.” I would say the same to David and Gerry, who have already come so far: If Shari’s last ask is for there to be a majority of the minority vote, then why not see it through?

I know it’s not what either of them want to do. They’ve already agreed to fork over the aforementioned $2 billion for her controlling stake in Paramount Global—a stake that is technically only worth around $850 million these days. They’ve also agreed to cough up some value for the non-Redstone shareholders: around $15 a share (before it gets pro-rata’d down to keeping their stock and something less than $15 a share in cash). They’ve also agreed to pay down $1.5 billion of Paramount’s debt in order to get the ratings agencies off the company’s back. And they’d be bringing in new management, pairing David with Jeff Shell and Jeff Zucker. They’ve done a lot.

So it’s entirely possible, after all they’ve given and given, that David and Gerry are at their breaking point with this majority-of-the-minority vote mishegas. I get it. But take it from a veteran M&A banker: They should give in to Shari on this one final deal point. It will be good for both of them, and the final test of the seaworthiness of their relaunched vessel.

Yes, giving Gabelli and his 5 million Class A shares veto power over the deal means that there’s one last person they’ll need to convince or, perhaps, incentivize. But it’s not like David and Gerry don’t already have the PowerPoint deck ready to go. Just grab the two Jeffs, take the short journey north to Mario’s office in Greenwich, and explain to him your combined vision for how the new Paramount Global will operate, how you will turn things around, what the “synergies” will be between the Paramount studio and the Skydance studio, what you will do with BET, what you will do with CBS and the affiliates, and how you will stem the losses at Paramount+.

This is actually a worthy test of the new strategy. After all, if this deal team can’t convince Mario, how in the world are they going to convince any other shareholders—A’s and B’s—to stick around? Without most everyone on board, this deleveraged re-cap will go right down the tubes. On the flip side, if they can get Mario on their team, that would be a powerful message before embarking on a deal of this magnitude. (This is not investment advice.) As I wrote about a few weeks ago, apropos of nothing, Mario tweeted about contingent value rights. Maybe that’s a sleeves-off-your-vest way that Ellison/RedBird could get Mario on board with their deal.

As for Shari’s ask, I get it. She knows she’ll get sued by someone, one way or another, and she wants air cover. Do this complex deal without the imprimatur of the non-Redstone voting shareholders and you might as well rent an apartment in Wilmington, Delaware—because that’s where everyone will be for the next few years, spending a whole bunch of time fending off shareholder lawsuits. And the price to settle those lawsuits will either be more money out of David and Gerry’s pocket, or money out of Shari’s pocket, or both. Too much brain damage, guys. Give yourselves a break and take the win-win. If you can convince Mario to vote for the deal, you’re done. You’re on the path to success. If you can’t, you are also done, in the sense that you can walk away from the deal, head held high, and know that you probably dodged a bullet.

Of course, based on its financial fundamentals, buying the company’s stock makes no sense. Its first-quarter 2024 results showed a sales decline of 29 percent year over year, although the quarterly loss narrowed to $32 million from $50 million. (Still a loss, guys!) The number of GameStop retail stores has shrunk to 4,000 nationwide, down by a quarter in the past five years. And nobody needs to go into a GameStop retail outlet anymore to buy gaming software or gaming merch. In fact, I think it’s safe to say that the only reason this company still exists as a viable entity is because it has become a meme stock. But one of the great things about America is that you still have the freedom to make whatever (legal) investments you want to make, no matter how stupid.

GameStop management, however, is not stupid. Every time Roaring Kitty does his thing and drives the stock up, the company sells stock during the run-up as the idiots buy it on this worthless news. The company sold almost $1 billion worth of stock in May after the first run-up, and then, on Friday morning, said it would sell another 75 million shares, worth almost $3.5 billion, leading the stock to plummet once again. No surprise there. But it does make you wonder why the Securities and Exchange Commission puts up with this bullshit. This is not investing. This is barely even speculating. This is just inanity. I wonder how the investors who bought on Thursday, when the stock was moving back above $40, felt on Friday when they had lost 40 percent of their investment in less than a day.

One trader—“anyatrades”—felt fleeced. She wrote on X, a.k.a. Twix, that she had a $270,000 gain in GameStop stock, “and then lost it all in less than 1 day. … It’s a strange feeling to go from $0 to $270,000 unrealized gain to $0 all within 1 day. All-inclusive emotional rollercoaster. … I cried today, I have to admit.” We also know how Roaring Kitty feels. He’s laughing all the way to the bank. According to the Financial Times, R.K.’s GameStop position lost some $200 million on Friday, but he was still up $150 million since he started this little ridiculous gambit a month ago. Nice work if you can get it.

Tesla, of course, is not technically a meme stock, in the sense that there does seem to be some sort of worthwhile business that the company is engaged in: making electric vehicles that people want to buy. Back in 2021, Tesla was worth more than $1 trillion. But it is meme stock-like in the sense that the company’s valuation has nothing to do with its financial performance. Somehow, even though Tesla stock is down nearly 29 percent this year, the company is still worth half a trillion dollars, more than most of the other big car companies combined. Its P/E ratio is 45; GM’s is 5.

At this point, we can stipulate that Elon Musk is a smart man and a decent businessman who does any number of stupid things, like buying Twitter for $44 billion. But he’s also responsible for Starlink and SpaceX. (As for The Boring Company and Neuralink, the jury is still out.) And for all his apparent genius, Elon has been well rewarded: He’s currently the third-richest man in the world, with a net worth of $203 billion, according to Bloomberg.

How in the world could one person with $200 billion to his name want more money? And not just a little bit more money, but more than $50 billion more—all while threatening to take it out of the hide of Tesla and its shareholders if his wishes aren’t granted. This isn’t just a ridiculous position, it’s also a form of corporate blackmail. But in the end, he’ll probably get what he wants when the vote is completed this week, on June 13—although its looking dicey as several big institutional shareholders aren’t backing his demand—given that he’s very effective at getting his way and shareholders are probably afraid of what will happen to their overvalued Tesla stock if he leaves. Just like over at Paramount, this is an appalling display of corporate governance.