NEW YORK: Paramount Skydance has agreed to temporarily delay its proposed $110 billion acquisition of Warner Bros Discovery while a federal court considers a legal challenge brought by several US states against the blockbuster media merger.

According to court documents filed on Friday, the companies will postpone completing the transaction until a federal judge issues a ruling on the states’ request to block or delay the deal.

The agreement means the acquisition will remain on hold until the court determines whether the legal objections raised by the states have merit.

The lawsuit has introduced fresh uncertainty over one of the largest media industry transactions in recent years, with regulators and state officials closely examining its potential impact on competition.

The postponement could prove expensive for Paramount Skydance.

Under the terms of the merger agreement, the company may be required to pay approximately $7 million per day in fees to Warner Bros Discovery shareholders if the acquisition is not completed by September 30.

Those daily payments could quickly accumulate if the legal proceedings extend beyond the expected timeline.

The proposed $110 billion merger is among the most significant transactions in the global entertainment industry and has attracted close attention from regulators and lawmakers.

Supporters argue the combination would strengthen the companies’ ability to compete in the rapidly evolving streaming and media landscape, while critics have raised concerns about market concentration and reduced competition.

The outcome of the federal court’s decision is expected to play a crucial role in determining whether the landmark acquisition can proceed as planned.