Investing.com -- A U.S. judge has temporarily halted Paramount Skydance's proposed $110 billion acquisition of Warner Bros. Discovery, granting a 14-day temporary restraining order in a lawsuit brought by a coalition of state attorneys general led by California Attorney General Rob Bonta.

California District Judge Araceli Martínez-Olguín issued the order on Monday following a hearing last week, preventing the companies from taking further steps to complete the merger while the court considers the states' antitrust challenge.

The lawsuit, filed last week, argues the transaction would unlawfully concentrate power across the media industry by combining the Paramount and Warner Bros. film studios, the CBS broadcast network, cable channels including CNN, TNT, MTV and BET, and streaming platforms Paramount+ and HBO Max under a single company.

The ruling marks the first legal setback for the blockbuster media merger, despite the deal already securing clearance from the U.S. Department of Justice and several international regulators. The states could seek a preliminary injunction or another temporary restraining order, potentially delaying the transaction beyond Paramount's targeted September closing and exposing the company to additional costs, including a quarterly "ticking fee" payable to Warner Bros. Discovery shareholders if the deal remains unfinished after Sept. 30.

The temporary restraining order came after Paramount told the court it intended to close the transaction as early as July 22 once all regulatory approvals were in place, the company's lead trial counsel Jeffrey Kessler told CNBC in an interview.

If the transaction extends beyond Sept. 30, Paramount would owe Warner Bros. Discovery shareholders an additional 25 cents per share each quarter, equivalent to roughly $650 million in cash per quarter. Paramount has also agreed to pay a $7 billion breakup fee if the acquisition ultimately fails because of regulatory obstacles.