Investing.com -- California Attorney General Rob Bonta on Monday led a coalition of 12 state attorneys general in filing a lawsuit to block Paramount Skydance's proposed $110 billion acquisition of Warner Bros. Discovery, arguing the deal would unlawfully reduce competition across the U.S. film and television industry.

The legal challenge marks a major escalation in regulatory scrutiny of what would be the largest merger in Hollywood history, threatening to delay or derail a deal that has the potential to reshape the media landscape by combining two of the industry's biggest film studios and cable television businesses.

The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges the merger would violate Section 7 of the Clayton Act by substantially lessening competition in theatrical film distribution and basic cable programming. The coalition also asked the companies not to complete the transaction until the judicial process concludes and said it would seek a temporary restraining order if they refuse.

According to the complaint, the combined company would control roughly 27% of the U.S. market for wide-release theatrical films and more than 30% of anticipated blockbuster releases. The states also contend the merged entity would hold about 27% of the market for licensing basic cable television channels, combining the second- and third-largest operators in that segment.

Bonta said the merger would lead to higher prices, lower-quality programming and less content, while reducing competition that currently benefits movie theaters, cable distributors and consumers. The lawsuit also argues the consolidation would diminish incentives for creative investment and reduce the diversity of films and television programming available to audiences.

The coalition includes the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington, making it one of the broadest state-led antitrust actions against a media merger in recent years.