(Adds lawsuit expected to be filed in the coming weeks in

paragraph 2, Paramount comment in paragraphs 5-6)

By Jody Godoy

June 5 (Reuters) - A group of U.S. states including

California and New York are preparing a lawsuit to block

Paramount Skydance's ( PSKY ) $110 billion acquisition of Warner

Bros, sources familiar with the matter told Reuters on

Friday.

The lawsuit is expected to be filed in the coming weeks, the

sources said. The case would mark the boldest move yet by the

states in their effort to be at the forefront of U.S. antitrust

enforcement, as their better-funded counterpart agencies in the

Trump administration take a more business-friendly view of

enforcement.

Analysts have also viewed Paramount as facing an easier road

to regulatory clearance from federal antitrust watchdogs in the

U.S. in part because of its political connections. Paramount CEO

David Ellison's father, billionaire Oracle co-founder Larry

Ellison, has cultivated ties with President Donald Trump.

Shares of Warner Bros fell after Reuters first reported the

news, and were down 3.6% on Friday afternoon. Paramount shares

added to losses and were down 6.7%.

A Paramount spokesperson said the deal would bring greater

competition, and opposing it "means giving entrenched incumbents

like Netflix an advantage they do not deserve."

"We will continue to fight against any attempt to derail a

deal that plainly benefits consumers, creators, and the industry

as a whole," the spokesperson said.

It was not immediately clear which other states would join the

lawsuit. A spokesperson for California Attorney General Rob

Bonta's office said California's investigation remains active

but declined to comment further.

The proposed transaction has faced pushback from actors,

writers and others in Hollywood over its potential to eliminate

jobs. Hollywood and Wall Street have been closely watching the

high-stakes deal, which would bring ​together some of the

entertainment industry's most enduring franchises.