The delay, filed in court on Friday, can cost Paramount $1.7bn in fees if the deal is not closed by next June.

Paramount Skydance has agreed to pause its $110bn acquisition of Warner Bros Discovery until after a federal judge rules on states’ challenge to the deal, according to court papers.

The delay, filed in court on Friday, could cost Paramount Skydance about $7m a day in fees it agreed to pay Warner Bros shareholders if the merger does not close by September 30.

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“We look forward to proving our case at trial,” Paramount’s spokesperson said.

Twelve states, led by California, sued on July 13, arguing the deal would “extinguish competition” in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers. Paramount has called the states’ claims meritless and pledged to “vigorously defend” its merger.

“Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries,” said New York Attorney General Letitia James, who is suing to block the deal.

Friday’s move arrives just days after US District Judge Araceli Martinez-Olguin granted a temporary restraining order requested by the states to freeze the transaction for several weeks.

The companies agreed to pause the deal until five days after the judge rules on the merits of the case, or June 1, 2027, whichever comes first. Paramount could owe as much as $1.7bn in ticking fees to Warner Bros shareholders if the deal is delayed until then.

Similar merger challenges have taken an average of eight months for a judge to rule, a review of recent cases by the Reuters news agency has found.

There have also been concerns over a media stranglehold as the merger would have brought CNN, currently owned by Warner Bros, under the umbrella of Paramount. The latter already owns CBS, which has seen a fair amount of turmoil amid allegations of bias in favour of US President Donald Trump under the leadership of CEO David Ellison, whose father, tech billionaire Larry Ellison, is a Trump ally.