Paramount Skydance has vowed to fight a lawsuit brought by 12 US states seeking to block its US$111 billion (A$170 billion) takeover of Warner Bros. Discovery, accusing regulators of protecting Netflix and other technology giants from competition.

The legal challenge argues the merger would reduce competition, increase prices and result in fewer films and television programs.

The deal would combine two of Hollywood’s five major studios and bring Warner Bros Pictures, HBO Max, CNN and Discovery under the same parent company as Paramount Pictures, CBS, Paramount+ and Australia’s Network 10.

Paramount described the lawsuit as “fundamentally flawed” and said it misrepresented how the entertainment market currently operates.

“The practical effect of this lawsuit is to shield those dominant streaming platforms like Netflix and technology companies from much-needed competition,” the company said.

Paramount argued the merger would create a better-funded competitor capable of investing more heavily in theatrical releases, premium programming and creative talent.

It has committed to releasing at least 30 films annually, maintaining a minimum 45-day exclusive cinema window and continuing to license content to third parties.

The states claim the combined company could control almost one-third of US theatrical film distribution and a similar share of basic cable programming, potentially giving it greater bargaining power over cinemas and television distributors.

The transaction has already been cleared by the US Justice Department and regulators in several other markets, including Australia and Canada, although reviews remain underway in the UK and Europe.

The ACCC previously found the deal was unlikely to substantially lessen competition in Australia’s media, streaming or advertising markets.

However, the US lawsuit could delay Paramount’s planned third-quarter completion date and extend uncertainty over the future ownership of Network 10, 10 Play and Paramount+.

If completed, the merger would give Network 10’s parent company access to Warner Bros., HBO, DC and Discovery content, potentially strengthening its position against local streaming rivals including Stan, Disney+ and Netflix.

Paramount has also reportedly considered moving its headquarters out of California if the legal challenge succeeds, while Bonta dismissed the suggestion as an attempt to pressure regulators.