WILMINGTON, Delaware, March 6 (Reuters) - A Delaware

judge is willing to consider allegations in a class action

lawsuit that Paramount Global's ( PARAA ) $8 billion sale to

Skydance Media should be blocked from closing because it

short-changes public shareholders, according to a Thursday court

filing.

Paramount's controlling shareholder, Shari Redstone, struck a

two-step deal in July to sell her stake in the Hollywood studio

as part of the deal with David Ellison's Skydance,

a streaming-era upstart. The companies are awaiting regulatory

approval for the deal to close.

In January, an investor group known as Project Rise Partners

submitted a proposal valued at $13.5 billion to acquire

Paramount, but that was rejected by a special committee of

Paramount's board.

In response, pension funds for New York City employees that

own Paramount stock filed a class action lawsuit in Delaware's

Court of Chancery alleging that Paramount's special committee

breached its fiduciary duties to the company's public

shareholders by not considering the bid from Project Rise

Partners.

On Thursday, Chancellor Kathaleen McCormick agreed to

expedite the pension funds' lawsuit but declined to issue a

temporary restraining order, or TRO, to block the deal because

it did not appear the deal was about to close.

"Although plaintiffs have demonstrated harm sufficient to

support expedition, there does not seem harm proximate enough to

warrant a TRO," McCormick wrote in her eight-page ruling.

McCormick said the companies must notify the pension funds

"optimally" five business days before closing so the funds can

seek a TRO to block the deal.

Paramount and Skydance did not immediately respond to

requests for comment.

As part of the deal, Skydance had agreed to a 45-day "go

shop" period that allowed Paramount to solicit and evaluate

other offers. That period ended on Aug. 21. If the company

chooses another suitor, it must pay Skydance a $400 million

break-up fee. The board weighed a competing offer from media

veteran Edgar Bronfman Jr., who subsequently withdrew, clearing

the way for Skydance Media to take control of Redstone's media

empire.

The closing of the Skydance deal is subject to approval by

the Federal Communications Commission, and according to

McCormick's ruling Paramount said the earliest the deal can

close is March 20.

The merger has an April 7 end date, although it can be

extended twice by 90 days if FCC approval has not been obtained,

according to McCormick's ruling.