Welcome back to In the Room. I’m Dylan Byers.

Greetings from Los Angeles. In tonight’s email, a thorough examination of the motivations and aspirations behind Ben Sherwood and Joanna Coles’ minority-stake takeover of The Daily Beast, an asset Barry Diller (and seemingly everyone else) no longer wants, but one that may at least offer the two legacy veterans a ticket back to the game they so obviously miss.

But first…

👀 Shell games: My partner Bill Cohan has some very intriguing new intel today on what the Paramount org chart and deal structure might look like should David Ellison, Gerry Cardinale, and KKR succeed in acquiring the asset. Per Cohan, “The current thinking is … to replace Bakish with Jeff Shell, who has been an executive-in-residence at RedBird since he left the top job at NBCU after an affair with a colleague was unearthed. David Ellison will run the combined Paramount and Skydance movie studios, while another eminent member of the RedBird executive stable, Jeff Zucker, would more than likely become the head of CBS and its affiliated television stations.” Plus, Bill reports that Cardinale and Ellison plan to plow billions into the company to pay down the debt and sweeten the deal for shareholders.

My two cents: Bill is reliably spot-on about Shell taking the helm at Paramount alongside Ellison, and about the broader plan to recapitalize and revitalize the business. It will be interesting to see how Zucker eventually factors into all this, whichever way it turns, and how he manages it all. His RedBird-IMI outfit is very much a standalone venture, and the Emirati funding is obviously a major complexifier for a deal that still needs to pass regulatory hurdles. Of course, it’s always possible Zucker could cede RedBird IMI responsibilities for a new role under Ellison and Shell. It’s certainly evident at this point that he is more of an operator, at least psychologically, than an investor, and he might welcome an opportunity to get back into the arena—not unlike the protagonists of today’s main feature. (As it turns out, most people who rise to a certain level of prominence in this industry have a very hard time leaving it behind.) In any event, the Ellison-Cardinale-KKR plan that Bill outlines is extremely compelling, and we’ll be watching this space.

🇺🇸 Avlon’s angels: John Avlon, the former CNN anchor and onetime Daily Beast editor who is now running for Congress in New York’s 1st District, has raised more than $1 million so far from donors, including a few stars of the Puck cinematic universe: Barry Diller, Eric Schmidt, Reid Hoffman, Dan Loeb, Adam Silver, Jeff Bewkes, Richard Plepler, James Murdoch, Mickey Drexler, Pam Wasserstein, Joel Klein, Andrew Yang, Jesse Angelo, Hilary Rosen, and Bradley Singer, among others. (Hat-tip to Teddy—who else?—for spotting the itemized filing.)

Of course, as I noted upon breaking the news of Avlon’s bid in February, many donors with houses in East Hampton, Sagaponack, and Montauk have their primary residences in Manhattan, or points much further west, and are thus incapable of voting. Avlon’s true challenge will be winning over the blue-collar townies of Suffolk County, which has been red since 2015, and which Trump won handily in the last two cycles.

Given Diller’s unsuccessful attempt to uncouple with the scrappy property in recent years, this arrangement seemed like a fascinating experiment, perhaps a last-ditch effort, and even a private equity play of sorts. After all, Coles and Sherwood were ostensibly being called out of retirement—you know, board seats, fun extracurricular projects, managing tax consequences, etcetera—to turn around a money-losing enterprise and either extract value or flip it. At the very least, it was, on many levels, a seemingly noble gesture: Two executives who didn’t have to work were engaged in a highly public turnaround that seemed, humbly, beneath their former stations. Anyway, good for them.

And yet, something felt off about the announcement. There were Sherwood and Coles, photographed at dusk, looking slightly menacing and puzzled and, well, anachronistic—like they were posing for the image above a David Carr column in a bygone media era. And, sure, the deal was interesting enough, but what was their plan exactly? The Beast, after all, had been shopped around town for ages, and the only seriously interested buyer seemed to be The Ankler.

Moreover, the Beast’s business model, itself, seemed fundamentally challenged. It relied on web traffic, which incentivized articles primed for virality (Prince Harry renouncing his British citizenship and a lawsuit involving a porn star were on the homepage today) with a contribution/subscription model off to the side. Whatever sheen its founder, Tina Brown, had baked into its brand codes—the Beast debuted with book recommendations from Bill Clinton and an Obama endorsement by Chris Buckley—had been diluted over the years as the business proved insufficiently large to win at the C.P.M. display game and/or too unluxurious and unfocused to capitalize on direct-sold, high-margin advertising. Meanwhile, the Beast shuffled through editors and identities.

If anyone could save the Beast, which loses millions per year, perhaps it was this duo. But changing a brand’s perception or its business model mid-flight is dreadfully difficult, even if it is majority-owned by a billionaire willing to invest more capital to resurrect its fortunes. Questions about the resuscitation plans were only exacerbated, shortly after the Times piece, when Coles cheekily tweeted out that her first operational move would be hiring a chief Lauren Sánchez correspondent. It seemed like a joke, and yet it wasn’t, and it called to mind, for many, Arianna Huffington’s provocative and yet inevitably meaningless decision to relegate Trump to the entertainment section of her digital enterprise nearly a decade ago. These sorts of proclamations generate buzz, but they don’t solve underlying business model challenges.

While Brown was navigating her exit, Sherwood and Coles were still scaling toward the crescendos of their own media careers. He was the infamously competitive TV news producer who had ascended the ranks of ABC News, leading Good Morning America to historic ratings preeminence before becoming head of the news division. Sherwood eventually became the president of Disney/ABC Television, serving in Bob Iger’s inner circle until the 21st Century Fox acquisition, circa 2018, when he was effectively replaced by Peter Rice. Coles, a British expat who fashioned her image in a Brown-like manner, had plunged headlong into the magazine world, running Marie Claire and becoming a ubiquitous fixture on the New York media and fashion scene. She eventually became the editor-in-chief of Cosmopolitan, and then the first-ever chief content officer for Hearst Magazines, a position she strategically quit, also in 2018, upon learning that she’d been passed over for the president job in favor of Troy Young. She was also appointed to the board of Snap, where she still serves.

As their careers blossomed, the Beast’s fortunes further dwindled. Under the stewardship of now-congressional hopeful John Avlon and then Noah Shachtman, the site managed to make some waves here and there—and invited a few unwanted lawsuits—but it never recaptured the luster or the excitement of those early years, and certainly never turned a profit. In January, Diller enlisted Whisper Advisors’ Jason Rapp to talk to possible suitors and offload the asset for good. Most potential suitors took a pass, but Diller knew that Coles and Sherwood had for years been informally scheming about launching a digital media startup together in their post-Disney and -Hearst iterations, even as they pursued other ventures—a youth sports app, in his case, and a couple soured SPACs in hers. At Diller’s urging, Rapp approached Sherwood and Coles and pitched them on a novel idea: What if they took over the Beast together?

Theoretically, Sherwood and Coles might have looked back on the Beast’s history, its evergreen financial challenges, the troublesome ad market, and Diller’s own eager attempts to offload the asset, and determined—as so many in the industry had—that it wasn’t worth the time, the money, or the potential embarrassment. Instead, they tried to buy it. Over several weeks earlier this year, they courted potential investors to see if they could raise enough money. In the process, either because they couldn’t come up with the necessary capital or favorable terms—or, probably, both—the two parties concocted another approach: Sherwood and Coles would take a 49 percent minority stake in the business and manage it, while Diller retained majority control. In exchange, they would get salaries, equity, and what one source described as “significant” capital investment.

The news of Sherwood and Coles’ deal, first reported here late last week and formally announced in the Times piece on Monday, mostly bemused industry insiders. On the surface, it felt like yet another doomed vanity play from legacy media veterans—another Quibi or Messenger. In a press release, Sherwood claimed that “the current media hellstorm feels like the ideal moment to jump back into journalism,” spinning conventional wisdom about contemporary business model challenges on its head. Meanwhile, Coles declared that “Tina Brown’s original vision of The Beast as a sophisticated tabloid is even more relevant today,” apparently identifying the re-emergence of a hole in the market somewhere between The Daily Mail and Vanity Fair and The Cut. But would that even be enough?

With no direction home, it’s perhaps no wonder that Sherwood and Coles spent their years on the sidelines observing the space and wondering, to themselves and to one another, whether there might be a more promising future in digital media. Since 2019, on again and off again, the pair had casually discussed launching a digital venture, dubbed “Project Scoop,” based on Charlie Chaplin’s United Artists model, wherein star journalists would band together under their direction and take equity in the business (a model not dissimilar from Puck…).

The Beast deal will force them to attempt a very different strategy: a restored investment in Brown’s populist, albeit slightly elevated, tabloid sensibility, with the hope that the remaining brand equity, such as it is, serves as a funnel to drive meaningful engagement, and thus advertising and subscription revenue. It’s a hard row to hoe.

Nothing is certain in media, of course, but it is striking that the duo decided to opt for a digital legacy player rather than strike out on their own. We’re living in an era where new brands are replacing old brands at a fairly extraordinary rate. Why wouldn’t Coles or Sherwood want to create their own Air Mail or Semafor or Punchbowl or Information, and own the majority and retain control and have more destiny over their upside, even if they had to forgo some creature comforts? One suspects that, perhaps, they were still as charmed by the old world as the new one.