The proposed Paramount Skydance acquisition of Warner Bros. Discovery is facing its biggest legal challenge yet, with several state attorneys general reportedly preparing an antitrust lawsuit that could delay or even block the Hollywood blockbuster deal.

If completed, the merger would bring Paramount Pictures, Warner Bros., HBO Max, Paramount+, CBS, CNN and dozens of major entertainment brands under one company. The legal battle matters not only to executives but also to streaming subscribers, movie fans, Hollywood workers and investors.

Why are states challenging the merger?

California Attorney General Rob Bonta is expected to lead a multistate challenge alongside officials from New York, Connecticut and Washington. They are expected to argue that combining Paramount and Warner Bros. Discovery could reduce competition across theatrical films, streaming and television.

Today, Paramount Pictures and Warner Bros. compete for scripts, actors, directors, production budgets and cinema screens. Regulators believe eliminating that rivalry could leave filmmakers and theater operators with fewer choices while increasing the company’s influence over the entertainment industry.

The proposed company would also own Paramount+, HBO Max, Discovery+, CBS, CNN, MTV, Nickelodeon, Showtime, TNT, HGTV, Food Network and several other major brands.

Industry opposition has also grown, with thousands of entertainment professionals expressing concerns about jobs and creative competition. Those concerns are explained further in this report on the growing Hollywood opposition to the Paramount-Warner merger.

Will the deal be blocked?

No. Even if states file a lawsuit, the merger is not automatically cancelled.

Attorneys general are expected to ask a federal judge for a preliminary injunction that would temporarily stop the companies from completing the transaction while the court reviews the case.

The judge could approve the request, reject it or encourage both sides to negotiate concessions involving theatrical releases, production spending or employment protections.

What does this mean for HBO Max and Paramount+?

Nothing changes immediately for subscribers. HBO Max and Paramount+ continue operating normally, and there is no need for customers to change or cancel their subscriptions.

David Ellison has said the two streaming platforms would eventually be combined after the acquisition. A merged service could include programming from HBO, Warner Bros., Paramount Pictures, CBS, Showtime, Discovery and Nickelodeon.

However, Paramount has not announced pricing, launch timing or how existing subscribers would transition to any future platform.

The discussion over streaming consolidation reflects wider concerns throughout Hollywood, including issues raised by industry professionals opposing the deal, which are explored in this report on the merger’s impact across the entertainment industry.

Why did the Justice Department approve the merger?

The U.S. Department of Justice concluded its federal review on June 12, saying it did not find enough evidence that the transaction would likely harm competition or consumers.

Its findings are available in the official Department of Justice statement.

Federal approval does not stop individual states from bringing their own antitrust case under state and federal competition laws.

Why investors are watching closely

Investors in Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD) are closely monitoring the legal process because delays could affect the value and timing of the transaction.

Paramount expects roughly $6 billion in cost savings within three years, but analysts are questioning how those savings can be achieved while maintaining movie production, employment and streaming investment.

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Could streaming prices or movie releases change?

There are no announced plans to increase HBO Max or Paramount+ subscription prices because of the merger.

Supporters say a combined company could compete more effectively with Netflix, Disney and Amazon while offering a larger content library. Critics argue that reduced competition could eventually give the merged company greater pricing power and fewer incentives to compete aggressively.

Ellison has pledged that Paramount Pictures and Warner Bros. would continue releasing at least 30 theatrical films each year, although regulators may examine whether that commitment should become legally enforceable.

The next major step will be whether the attorneys general formally file their lawsuit and seek an injunction.

The complaint is expected to reveal whether the case focuses primarily on movies, streaming, television networks, advertising or employment. European and UK regulators are also continuing their reviews, meaning additional approvals may still be required.

For now, HBO Max, Paramount+, CBS, CNN and the companies’ other entertainment brands continue operating as usual while one of Hollywood’s biggest proposed mergers enters its most important legal phase.