California and 11 other states sue to block Paramount's takeover of Warner Bros.

California and 11 other states have filed a lawsuit to block Paramount's $110 billion takeover of Warner Bros. Discovery, arguing that the deal would reduce competition in film distribution and cable television, harming movie theaters and television distributors.

The lawsuit poses a serious threat to Paramount CEO David Ellison's plan to turn his company into a major competitor to Netflix and Disney, Reuters reports.

"With this lawsuit, California and other states are fighting for a free and fair marketplace, not a rigged one," California Attorney General Rob Bonta said, adding that the takeover "would lead to higher prices, lower quality, and less film and television content, harming movie theaters, basic cable distributors, and ultimately the audience on every couch and in every movie theater seat in the United States."

Paramount did not immediately respond to a request for comment Monday. The company has previously said any lawsuit against the deal would be politically motivated.

If it were allowed to complete the takeover, Paramount would control 27 percent of the distribution market for films shown nationwide, 30 percent of the distribution of blockbuster films and 27 percent of the basic cable market, the states said.

It will likely take months for the court to rule on the claims in the lawsuit, which could delay and cost Paramount hundreds of millions of dollars. The states have asked Paramount to delay the deal until the court case is over and have said they will seek a court injunction against the takeover if the company does not agree.

Paramount and Warner Bros. are competing with each other for prime time and screen space in thousands of theaters across the country, Bonta's office said. Without that competition, theaters and audiences could face higher prices, the attorney general said. Similarly, pay-TV distributors and their customers rely on competition between the two companies, which together would control major channels such as CNN, MTV, HGTV, Cartoon Network and Nickelodeon, according to Reuters.

The takeover, which is being challenged by Democratic attorneys general, has also fueled accusations that President Donald Trump's administration is rewarding friends and donors with lenient regulatory treatment.

The US Department of Justice approved the deal last month and went a step further, stating that the takeover would benefit consumers and employees.

The deal has drawn criticism from actors, screenwriters and others who fear it will lead to job losses. Cinema owners have also opposed the takeover, worried that the merger of Warner Bros. and Paramount Pictures would lead to fewer films.

Paramount said the deal would allow it to produce more, not less, content after cutting $6 billion in costs by eliminating duplicate infrastructure, marketing and administrative jobs. Ellison promised the combined studio would release 30 films a year.

Paramount CEO David Ellison's father, billionaire Oracle co-founder Larry Ellison, has developed a close relationship with President Donald Trump, while the company has also hired former Trump administration officials.

Paramount has committed to paying Warner Bros. Discovery shareholders about $650 million in compensation each quarter if the deal doesn't close by October. The company has said delays could force it to renegotiate the financing of the acquisition, create uncertainty about its share price or even lead to the transaction falling through altogether.