By Tom Hals

WILMINGTON, Delaware, March 6 (Reuters) - A Delaware judge is willing to consider allegations in a class action lawsuit that Paramount Global's PARA.O $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.

(Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Dawn Chmielewski in Los Angeles; Editing by Leslie Adler)

((thomas.hals@thomsonreuters.com; 610-544-2712))