Paramount's $111 billion (roughly £87 billion) takeover of Warner Bros. Discovery has been thrown into doubt after a coalition of 12 US states, led by California, sued to block the deal, likely scuppering its planned July closing date. The states' lawsuit alleges the merger would seriously damage competition in theatrical distribution and cable licensing, combining two of Hollywood's top five studios in a way that could raise prices, cut the number of films released, and reduce the variety and quality of content. A federal judge signalled she may be inclined to grant a temporary restraining order freezing the deal, with a ruling expected by next Wednesday.

The stakes are high for Paramount financially: under the deal's terms, Warner Bros. shareholders are owed around $650 million per quarter, or $6.9 million a day, if the transaction is not completed by 30 September. Paramount has proposed holding off closing for up to a month if the court schedules preliminary injunction proceedings for late August, whereas the states want those proceedings pushed back to next year. Lawyers for the states argued the merger is "the largest in Hollywood history" and would let the combined company pocket more than a quarter of every box office dollar. Courts have historically been more willing to grant temporary restraining orders than preliminary injunctions in such cases, as seen in the FTC's unsuccessful attempt to block Microsoft's acquisition of Activision Blizzard.