Shares of Paramount and Warner Bros. Discovery declined following reports that several states are preparing legal action to halt the proposed merger.

Multiple U.S. states are gearing up to file a lawsuit to block Paramount's planned acquisition of Warner Bros. Discovery. This development led to a significant drop in the share prices of both media companies.

The proposed merger, which received shareholder approval in April, has been under regulatory review. Paramount's CEO, David Ellison, had previously stated publicly that he anticipated the deal closing by September.

A report indicated that several states are preparing to sue to block the merger, though the specific states involved were not immediately clear. A separate report earlier suggested that California's Attorney General, Rob Bonta, would soon decide whether to file a lawsuit to stop the transaction.

In afternoon trading, Paramount's stock price fell by 7%, while shares of Warner Bros. Discovery dropped by 2%.

Paramount issued a statement, arguing that opposing the deal means opposing greater consumer choice, new opportunities for creators and workers, and increased competition across the creative ecosystem—goals it claims are contrary to the purpose of antitrust laws. The company also stated that blocking the merger would unfairly benefit existing giants like Netflix. Paramount vowed to continue fighting any attempt to disrupt the transaction, which it believes is clearly beneficial for consumers, creators, and the broader industry.