The United States plans to file a lawsuit to block Paramount (PSKY.US) from acquiring Warner (WBD.US).

According to sources, California, New York, and several other states in the United States are preparing to file lawsuits to block the deal for Paramount Sky (PSKY.US) to acquire Warner Bros. Discovery (WBD.US) for $110 billion. In response to this news, Paramount Sky fell 4.31% on Friday, while Warner Bros. Discovery fell 2.81%. Sources say that the lawsuit is expected to be filed in the coming weeks. It is not yet clear which other states will join the lawsuit. This would be the boldest move yet by states in trying to push to the forefront of U.S. antitrust enforcement. California Attorney General Rob Bonta criticized what he called the Trump administration's "abdication of responsibility" of federal antitrust agencies. He pointed out that compared to state governments, federal agencies have more resources. As a Democrat, Bonta has been leading the group of state governments expressing concern about the deal. Shortly after Paramount announced its victory over streaming giant Netflix in the bidding war and its decision to acquire Warner Bros. Discovery, Bonta promised to investigate. On Friday, a spokesperson for Bonta's office said that the investigation in California is ongoing but declined to comment further. Not all lawsuits trying to stop mergers are successful. But if a judge were to order a pause in the deal during the legal process, the lawsuit could delay the completion of the merger by several months. Paramount has agreed to pay compensation to shareholders if the deal is not completed after October. The company recently stated that the accumulated fees amount to around $6.9 million per day. Previously, Paramount paid Netflix $2.8 billion on behalf of Warner as a "breakup fee". Analysts say that Paramount's connections in politics and other factors may make it easier for the company to obtain approval from U.S. federal antitrust regulators. Paramount CEO David Ellison's father, billionaire and Oracle Corporation co-founder Larry Ellison, has long been close to President Trump. A source familiar with the situation said that the U.S. Department of Justice is expected to make a decision on the deal soon. At the end of March this year, the DOJ issued subpoenas requesting information on how this merger would affect film production output, content rights, streaming competition, and the movie theater industry. A Paramount spokesperson said that the deal would bring more competition and that opposing the deal "means giving Netflix and other well-established giants advantages they should not have." The spokesperson said: "We will continue to oppose any attempts to disrupt this clearly beneficial transaction for consumers, creators, and the entire industry." Paramount has promised to retain both studios after the deal is completed and to produce at least 30 theatrical films each year. This deal will consolidate two of the four major Hollywood movie studios and has sparked criticism from actors, writers, and other industry professionals who fear job cuts. Theater operators are also against the deal. They believe that the merger of Warner Bros. movie studios, which have produced films like "Harry Potter" and "Superman," with Paramount will reduce the number of films available for theaters to screen, weakening market competition.