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

The Paramount Global stock jumped 14 percent following my partner Matt Belloni’s report, last Thursday, that David Ellison’s Skydance and Gerry Cardinale’s RedBird were starting to kick the tires on Shari Redstone’s family business. In a related posting later today, Matt and I discuss the relative merits of his great reporting. Our exchange will be included in What I’m Hearing, his must-read private email about Hollywood. I assume you already subscribe. (But click here if you haven’t yet for some reason.)

In today’s edition, I offer some thoughts on the demise of the Redstone family jalopy and explain why I’m no longer bullish on Nelson Peltz’s campaign for Disney board seats.

But first….

• Some thoughts on KKR’s new S&S board: It’s been three months since KKR acquired Simon & Schuster from Shari Redstone’s Paramount Global after a disastrous initial auction that saw an antitrust case, a billion dollars left on the table, endless finger pointing, and multiple scalps left behind. But KKR, which looks to have acquired the legendary publishing house for a steal after the initial deal with Penguin Random House fell apart, is off to a great start with its new portfolio company. S&S recently announced its new board of directors, led by my friend Richard Sarnoff, the former media executive turned KKR partner.

  Sarnoff, who successfully engineered the deal for KKR, is a wholly appropriate chairman. He will be joined by two of his KKR partners as well as S&S C.E.O. Jon Karp. Notably, KKR also appointed Madeline McIntosh, the former C.E.O. of Penguin Random House in the United States. McIntosh formerly reported to Markus Dohle, the C.E.O. of Penguin Random House who was defenestrated in December 2022 after PRH’s failed effort to acquire S&S. (McIntosh left PRH a month later after her own failed effort to succeed him). The board will also include Vanessa Pappas, a former chief operating officer of TikTok and Kareem Daniel, Bob Chapek’s right-hand man during his troubled and brief reign atop Disney. That’s a lot of technology, media, and finance experience governing an independent book publisher. That’s the convening power of KKR at work.

  Now that S&S is finally out from under the Paramount Global umbrella, I am sure the business will continue to grow and to thrive since there is likely an incentive system in place to reward its management team for success. The pandemic was a boon for the entire industry, but it’s been a bit of a rougher year for S&S so far in 2023. In the third quarter, S&S’s revenue fell to $307 million, from $353 million in the third quarter of 2022, while its operating income fell to $60 million from $93 million a year earlier, dropping by one-third.

  But unlike when S&S was part of a big media conglomerate, Karp & Co. will be rewarded mightily for improving revenue and operating income, and, yes, EBITDA. It’s way too early to be talking about an exit—the deal just closed in late October—but Sarnoff, KKR, and Karp will likely come out the big winners when it materializes.

After taking control of National Amusements, the family’s New England-based movie theater chain, Sumner started to build his media empire. In 1987, he bought Viacom, which owned MTV among other pioneering cable channels, for $3.4 billion in cash. Seven years later, he outlasted billionaire media moguls Barry Diller and John Malone to buy Paramount Communications, what used to be called the conglomerate Gulf & Western, for $10.1 billion. As part of the deal for Paramount, Sumner ended up with the Paramount movie studio. (When I was at Lazard, I worked on the Viacom/Paramount deal, which at the time was one of the largest, and highest-profile combinations, given the battle royale that ensued to win it.)

In 2005, Sumner decided the businesses should be split into two separate companies because he no longer believed they made sense together. After Sumner’s health deteriorated, Shari took control of the two companies and decided they should be recombined, in order to make their eventual sale easier, and more tax efficient (or at least, that’s the reason I always thought she did it). That eventually happened in December 2019. Sumner Redstone died in August 2020.

Today, the company is known as Paramount Global, with a market value of around $11 billion and a market capitalization of nearly $25 billion. Given that Sumner spent some $50 billion buying those businesses, their current value would not make him happy, I suspect, especially since he was a man who fiendishly checked the stock prices of CBS and Viacom all day long and wasn’t shy about letting his C.E.O.s know that he was watching.

As for the Redstone family fortune, its 10 percent economic stake in Paramount Global is now worth $1.1 billion—and that’s up because of the heightened deal chatter after Matt’s news break on Thursday evening—a fraction of the $5 billion or so that Sumner and his family were worth at the peak in 2015. Sumner never wanted Shari to take over what is now Paramount Global, but Shari did so anyway, figuring that she was the best and rightful steward of the fortune that her father spent his life building. Call me crazy, but I don’t think that worked out so well.

He’s done some clever things in recent weeks, such as reinstating the Disney dividend and adding two new board members, both savvy choices, in effect boxing out Peltz both physically and metaphorically. What could Peltz and his three board members bring to this party at the moment that Iger hasn’t already addressed in one way or another? Hulu? That negotiation is well underway. ESPN’s delicate transition from linear to digital? Also well underway, thanks to Jimmy Pitaro, although the details of how and when remain elusive. Iger’s commitment to the parks business? Check.

The other unresolved issue at Disney, of course, is succession. Iger blew it the first time, obviously, to the point where he had to return to the corner office in his 70s. He’ll now be there until 2026, even though his tenure was originally supposed to end in 2024. For all his quirks, the Smiling Croc does know how to foment change inside the boardroom, for better or worse. He did it at DowDuPont. He did it at GE. With three board seats at Disney, he could probably cause a lot of trouble. On the other hand, I think Iger’s been very clever in bringing James Gorman, the outgoing C.E.O. of Morgan Stanley, onto the Disney board.

Gorman is not only a former classmate of mine at Columbia Business School, he’s fresh from a brilliant run at Morgan, resurrecting it from its near-death experience during the 2008 financial crisis and managing his own succession rather seamlessly with the appointment of Ted Pick. In the process, Morgan Stanley managed to surpass Goldman Sachs in market value and still has a $21 billion advantage. Gorman will remain executive chairman of the Morgan Stanley board but will no longer be running the firm day-to-day. He also knows how to manage talent. (If you think creatives and agents are difficult, allow me to introduce you to bankers, whom I have seen bitch and moan about their “light” $3 million bonus.) In short, he’s the perfect foil for Iger. What value does Peltz bring to the succession question on the Disney board if Gorman is already there? Perhaps not much, at this point.

Iger, a genius at managing the narrative, has become a surprisingly sympathetic figure of late. Peltz lost me when he leaked to The Wall Street Journal, the day after Hamas attacked Israel, that he owned 32.9 million Disney shares. Peltz made it seem like Trian, his fund, had put more of its money on the line—investing another $2 billion or so, beyond its initial $1 billion stake from the first proxy battle. But that was fiction. Yes, Trian bought some more Disney stock, but by far the largest increase came from Perlmutter, who gave Peltz his proxy on voting his 25.6 million Disney shares. Good for Nelson that he has more shares to vote, but to leave the impression that Trian had bought them, when it hadn’t, was misleading and a bad look for an activist pledging transparency.

The other unlikely source of sympathy for Iger is none other than Elon Musk, who has really been laying it on thick with Iger ever since his infamous interview with Andrew Ross Sorkin at November’s DealBook conference. Not only did Elon call out Iger by name during the interview, but he’s been on a Twitter/X rampage against him and Disney ever since, arguing that Disney and Iger are somehow villainous for advertising on Meta but not X. Good lord, Elon. If Twitter/X hadn’t become such a cesspool, maybe corporate advertisers wouldn’t be fleeing the platform in droves.

In the end, I wouldn’t be the slightest bit surprised to see Peltz pull back from filing an actual proxy statement, as he did last time. After all, proxy fights are expensive—$25 million and up—and he’s already got the dividend back and probably a decent profit to boot. It’s Christmastime, and the primo Palm Beach season is upon us. Nelson should kick back in the comforting proximity of fellow billionaires and hang out with his in-laws, David and Victoria Beckham, and let this one go.