Hello and Welcome to Dry Powder. I’m Bill Cohan.

It was a very significant week for two leading lights of the Dry Powder Cinematic Universe: Ari Emanuel outfoxed the public markets and earned a second marquee liquidity event in the last half-decade (yes, I know he’s pledging to roll in $200 million of his stock into the new deal…) while Shari Redstone made a confounding (and short-sighted) choice of her own. Today, I offer my reported analysis on the secret behind these decisions, and what it means for Wall Street writ large.

But first…

• Nondescript Park Avenue office buildings are in the eye of the beholder: Before we begin, a short tangent. After publishing the first part in my series on Leon Black and his seemingly inexplicable ties to Jeffrey Epstein, I was delighted to receive a bounty of flattering reader feedback. (Yes, yes—thank you, one and all. And I hope you enjoy the second installment, this Wednesday, just as much.) Some readers remain incredulous, of course, that Leon could spend that many years in and around Jeffrey Epstein without realizing what he was up to, whether he participated in the horrific behavior or not. Others blamed him, one of the great dealmakers of our time, for being blind to the realities—even if he didn’t know, he should have, or so their argument goes.

  In the meantime, though, I wanted to share with you my favorite response, so far, from Jay Futersak, the president of Circle Realty Group, whose portfolio includes 445 Park, the site of Black’s family office, which I described (perhaps a tad condescendingly but nevertheless accurately) as “nondescript.” Futersak, naturally, had a bone to pick with my critical assessment of his property. “I must correct you,” he wrote to me. “Our building is situated in the most valuable location in the plaza district. Moreover the building has incredible character and details.”

  Alas, the building is undeniably indistinct, especially when it is compared to many of the other historic buildings that line Park Avenue between 42nd Street and 57th. And not to prolong this disagreement, but the building was built postwar, in 1947, and has 22 floors. And it can’t hold a candle to Leon’s old office, around the corner at the Solow Building (now the Soloviev Building, I should note, since Solow’s kid is in charge) at 9 West 57th Street, which is one of the most magnificent buildings in all of Manhattan. Anyway, agree to disagree, Jay…

The noble purpose, obviously, was to protect minority shareholders from a transaction that unfairly benefitted the insiders at their expense. This sort of structure is perhaps most crucial in take-private situations, when boards need to align the interests of management team members and various shareholders. We just saw that dynamic play out twice in the last week: once, with Silver Lake, the private equity firm, which agreed to acquire the rest of Ari Emanuel’s Endeavor Group Holdings, and then again with the latest twist in the Shari Redstone drama. Interestingly, both of their respective special committees were advised by the much-admired duo of Cravath Swaine & Moore, the Wall Street law firm, and Centerview Partners, the influential investment boutique run by my friend Blair Effron. In my view, they’re well on their way to making a mockery of the sacred role of a special committee, although there’s still time to reverse course, at least in the case of the Paramount fiasco. And obviously, it’s very hard to know what’s going on inside such rooms when you are not in them. The pressures can be immense, to put it mildly.

Paramount Global would therefore seem like a natural target for Apollo, which after some study believes it can assume Paramount’s debt obligations without a debt restructuring or refinancing. (I don’t know what they would do with the tired cable assets and the money-losing streamer, but maybe their off-ramping factors into the Apollo equation.) To my mind, the beauty of the Apollo offer is that it’s clean: It would be for the whole company and would benefit all Paramount shareholders, not just Shari Redstone and the Redstone family’s holding company, National Amusements Inc. In other words, it’s completely straightforward and uncomplicated and probably could be decided by the full board, potentially obviating the need for the special committee.

And yet… the Paramount board has decided, instead, to enter a 30-day exclusive period to negotiate a deal with David Ellison, the founder of Skydance Media, another Hollywood studio, and his financial backers, RedBird Capital and KKR. Ellison’s play has been to make a two-step process out of the transaction, for reasons that I find absolutely mystifying. Ellison, supposedly, has struck a deal with Shari to buy NAI, which as faithful readers know well by now owns around 10 percent of the economic interest in Paramount, worth around $870 million these days, and also owns 77 percent of the voting control of the company (as well as 900 theaters and hundreds of millions of dollars of obligations in the form of a bank loan and pay-in-kind preferred stock). What Ellison has agreed to pay Shari for NAI has not been made public, or leaked yet, but buying NAI does not get Ellison and Skydance what they really want: the Paramount studio. That’s why, presumably, Ellison and Paramount have entered these exclusive negotiations to somehow see if a deal can be reached to merge the Skydance and Paramount studios. But how Ellison and Paramount go about trying to merge their two studios without Ellison buying the 90 percent of Paramount Global that NAI doesn’t own is a real head-scratcher, and any such plan would seem to be a recipe for shareholders lawsuits up the wazoo.

Ellison’s pitch, according to CNBC, is that after buying NAI, he somehow plans to merge it and Skydance into Paramount in exchange for a majority stake while the rest trades publicly? Or maybe he’s no longer offering to buy NAI and will just merge Skydance into Paramount plus cash from KKR and RedBird for a large minority stake in the company? But something isn’t adding up. Wouldn’t Shari still have voting control? Could this cockamamie plan possibly be what Ellison is proposing? And is this really what the special committee prefers to the Apollo deal?

In short, the proposed Ellison deal borders on the insane and should have been rejected out of hand by the special committee because it will likely end up being patently unfair to the non-Redstone shareholders of Paramount Global, among them both Warren Buffett and the long-suffering Mario Gabelli, who has owned Paramount stock for many years and has ridden it all the way down. Instead, the special committee has decided to pursue the Ellison deal and ignore, for now, the Apollo deal. Somebody smart, please tell me why this makes the slightest shred of sense. (In all seriousness: Steve, Jamie, David … lemme know.)

And this is where the special committee of the Paramount board, and its advisors Centerview and Cravath, need to step up and play their sacred role on behalf of the non-Redstone shareholders. Unless Ellison makes an offer for Paramount that treats all shareholders, Redstone and non-Redstone, the same, his deal should be abandoned tout suite. The optimal path forward for all Paramount shareholders is the Apollo deal for the whole company. If the 50 percent premium being offered by Apollo is deemed too low, the board and the special committee should ask for another pound of flesh, or get Ellison to restructure his deal to include all the company’s shareholders, not just Shari. “It is beyond baffling to see the Paramount board of directors ignore an all-cash offer for 100 percent of Paramount,” said our friend Rich Greenfield, at LightShed Partners. Clearly, I agree. And of course, this saga is far from over.

They certainly want us to think they did. The press release proclaims that the $27.50 all-cash offer was a 55 percent premium to the “unaffected share price” of Endeavor, which is Wall Street speak for the price that Endeavor stock was trading at before Endeavor and Silver Lake announced last October that this might happen. The press release also goes on about take-private premiums in general and how Silver Lake’s offering was above the average premium.

Fair enough, sure, but it’s also a much smaller premium—14.6 percent, in fact—to the Endeavor I.P.O. price, back in 2021, of $24 a share. (The press release makes no mention, of course, of the premium to the I.P.O. price.) Anyone who bought at the I.P.O. and then hung in there as the stock traded into the $30+ per share—getting as high as nearly $35 per share in December 2021—will take no comfort from the Silver Lake deal, alas. There might also be some dividend sweeteners for the public shareholders. Stay tuned.

Those who will take comfort from this deal, as you would expect, are Ari Emanuel and Patrick Whitesell, the two founders of what is now Endeavor. Who knows what the two men took off the table in the years before the company went public—likely hundreds of millions of dollars—but they will make another killing if this deal goes through. Matt Belloni, my partner and a former lawyer, slogged through the legalese-filled Endeavor 8-K, filed on April 2, to discern that Ari will get quarterly royalty payments of 2.5 percent of net cash profits from the WME talent agency plus new shares, a plane, and more goodies. (Disclosure: WME represents Puck but not me.) Whitesell could get the same royalty stream too, if he sticks around, or take a $60 million payday and run. He is also getting a new $250 million fund from Silver Lake to do his own thing.

Shapiro, meanwhile, more than doubles his salary to $7 million a year plus a guaranteed $15 million bonus plus another $15 million when the deal closes and 1 percent of the equity in new Endeavor. Ironically, Ari gets a $25 million bonus when various assets are sold out of Endeavor—to unwind the mishmash that he created—and Shapiro can potentially earn as much as another $100 million if, as Matt wrote, he “purges everything they want purged,” after which he gets a $5 million salary and a $2 million bonus.

It’s all just so gluttonous and really makes you wonder whether special committees of boards of directors, and their advisors, can do their sacred jobs anymore, or whether these assignments have just become another legal fig leaf for doing what the controlling shareholders want to do, with minimal interference. Of course, these two deals probably make Centerview and Cravath more valuable to boards, or at least to their controlling shareholders, than ever before.