Overview of The Town
This episode of The Town focuses on Paramount Skydance’s legal battle with California and other states over the company’s proposed merger with Warner Bros. Discovery. Host Matt Belloni interviews Paramount’s chief legal officer, Macon Delrahim, who argues that the states’ antitrust case is fundamentally flawed because it relies on an artificially narrow definition of the relevant markets. Delrahim insists the deal is pro-competitive, says Paramount is open to certain remedies, and argues the merger should be allowed to close quickly unless the court finds a real antitrust problem.
Core Issues in the Antitrust Fight
The three markets the states are targeting
The states argue the merger illegally reduces competition in:
- Wide-release theatrical movies
- Blockbuster films
- Television/cable network distribution
Delrahim’s response: all three market definitions are too narrow and ignore how the entertainment business actually works today.
Paramount’s main legal defense
Delrahim says the state complaint fails at the first step because the market definitions are “gerrymandered” to create the appearance of market power. His core points:
- The movie business is broader than the “big five” studios.
- Companies like Amazon MGM, Apple, Netflix, Lionsgate, A24, and others can and do compete in theatrical releases.
- The cable/distribution market is in secular decline, so legacy channels should not be treated as a static, isolated market.
- Streaming, YouTube, FAST channels, and other digital platforms must be considered part of the competitive landscape.
The Movie Market Argument
Paramount’s view
Delrahim argues the state’s movie-market theory is outdated because it assumes only a handful of traditional studios can release big theatrical films. He says that is false in 2026-era Hollywood:
- Amazon MGM releases theatrical films
- Apple can distribute wide-release movies
- Netflix is experimenting with theatrical releases
- Other independent and specialty players also matter
He says the market is dynamic, and antitrust law should reflect who can actually enter and compete, not just who historically did.
Bellany’s pushback
Bellany repeatedly notes that California’s attorney general, Rob Bonta, has argued the law looks at the market as it exists now—not where it may be heading. Delrahim rejects that framing, saying competition analysis must account for real-world entry and expansion.
The Cable and Television Distribution Argument
Paramount’s position
Delrahim says the cable market cannot be treated as if streaming doesn’t exist. He argues:
- Traditional cable is shrinking about 10% year over year
- Basic cable viewership is down sharply
- Consumers increasingly watch Netflix, YouTube, Paramount+, Peacock, and other platforms on TV screens
- Cable channels and streaming services are increasingly complements, not pure substitutes
He says the states are ignoring the economic reality that the market is already moving away from traditional cable.
Bellany’s challenge
Bellany points out that Paramount still makes a significant amount of money from cable fees and carriage negotiations, which suggests the business remains valuable. Delrahim responds that the decline is obvious and the market power theory still doesn’t hold.
The Philadelphia National Bank Presumption
Delrahim also pushes back on the legal presumption that mergers creating a 30%+ market share are presumptively illegal under the Philadelphia National Bank doctrine.
His view:
- The case is outdated
- The Supreme Court created a presumption not clearly written in statute
- Even if the presumption applies, Paramount says it can rebut it with evidence showing no real anticompetitive harm
He says the government is relying too heavily on a structural presumption instead of actual economic effects.
Why Paramount Thinks the Case Is Politically Driven
Delrahim repeatedly suggests the lawsuit is politically motivated:
- He says California’s AG is under pressure from his base
- He accuses the states of trying to weaponize antitrust law
- He argues critics are really targeting CNN and broader media ownership issues, not genuine antitrust harm
He also frames some of the opposition as a speech/First Amendment issue, warning that regulators should not use merger review to control editorial ownership.
Settlement and Remedies
Paramount says it has already offered concessions
Delrahim says Paramount has discussed behavioral remedies with the states, including:
- Commitments around the number of films released
- Potential production-related promises
- Enforceable conditions tied to theatrical output
He claims these settlement ideas were shared with the AGs months earlier, but says they got little response.
What Paramount is willing to do
He does not give a hard line on every concession, but says:
- “Nothing is off the table” in negotiation
- Any remedy must be legitimately tied to an actual antitrust issue
- Paramount is already voluntarily doing some of what the state wants
Bellany notes the state seems to prefer structural remedies, like asset sales or spinoffs, especially if CNN is part of the equation.
CNN, Cable Assets, and Possible Divestitures
Bellany presses Delrahim on whether Paramount would sell or spin off CNN or other cable assets.
Delrahim’s response:
- Paramount is open to “legitimate discussions”
- He rejects the idea that CNN itself creates antitrust harm
- He warns that forcing a sale for political reasons would raise serious First Amendment concerns
- He says the cable networks are in decline and are being pushed toward streaming anyway
He also emphasizes that CBS is already part of the company, so adding cable assets would not necessarily create the kind of new market power the states claim.
California, Jobs, and Relocation Threats
The conversation also turns to whether Paramount might move operations out of California.
Delrahim’s stance
- He says multiple states have approached Paramount about relocating
- He insists Paramount still has a real commitment to California
- He says the company moved its headquarters to California recently
- He frames state competition for production jobs as normal and healthy
Bellany suggests the company may be using relocation talk as leverage against California regulators.
Likely Timeline and Next Steps
Delrahim’s view of how the case ends:
- He expects the merger to close eventually
- Ideally, he wants closure by September
- If the judge grants only a temporary restraining order, the case could still move quickly into a preliminary injunction fight
- If there is a longer injunction, Paramount will likely appeal
He says he does not think the case will ultimately block the merger.
The Writer’s Guild and Other Related Litigation
Bellany also brings up the separate lawsuit involving the WGA, which is raising concerns about job losses and the concentration of buyers for scripted content.
Delrahim argues:
- More scale can mean more content production
- A larger merged company could create more demand for writers and talent
- Competition for creators would increase, not decrease
He points to examples like:
- Paramount competing with Netflix for creators
- UFC and other content deals helping attract subscribers
- More buyer competition potentially increasing creator pay
Main Takeaways
- Paramount’s lawyer argues the state antitrust case is built on bad market definitions.
- The company says it competes in a much broader entertainment ecosystem that includes streaming, YouTube, FAST channels, and digital platforms.
- Delrahim believes the merger is pro-competitive and that any harms are speculative or political.
- Paramount says it is willing to negotiate behavioral remedies, but not concede that the deal is unlawful.
- The biggest practical risk is whether the court issues a temporary restraining order or preliminary injunction that delays the merger into the fall or beyond.
Notable Themes
- Antitrust vs. industry reality: The episode repeatedly contrasts legal market definitions with how entertainment actually functions today.
- Politics vs. law: Delrahim argues the case is politically motivated; Bellany treats that claim with skepticism but acknowledges the politics are impossible to ignore.
- Streaming’s disruption: Much of the defense rests on the idea that traditional cable and theatrical markets can’t be analyzed without factoring in streaming and platform competition.