The Hollywood studio, which has already struck an $83bn (£61bn) deal with Netflix, said it had agreed with the streaming giant to give Paramount until Feb 20 to improve on its rival $108bn bid.

Warner Bros said its board continued to back the Netflix deal and said a shareholder vote on the takeover will take place on March 20.

However, the move signals a softening of the company’s position after it rebuffed repeated approaches from Paramount, which is controlled by Larry Ellison, the billionaire Oracle founder.

David Zaslav, the chief executive of Warner Bros Discovery, said the studio was engaging with Paramount to determine whether it could address the “deficiencies” in its previous offers and present an “actionable, binding proposal”.

Warner Bros said the change of course came after a “senior representative” for Paramount told one of its board members that the rival suitor could increase its bid from $30 to $31 per share.

They added that $31 per share would not be Paramount’s “best and final” offer, according to Warner Bros, which is currently valued at $28 a share. Netflix’s initial deal was struck at $27.75 a share.

It comes after Paramount last week launched a fresh attempt to derail Netflix’s swoop on the Hollywood studio behind the Harry Potter franchise.

The US media group offered to pay a so-called “ticking fee” of $0.25 per share to investors every quarter should its deal fail to close by the end of the year.

It also agreed to cover the $2.8bn termination fee Warner Bros would have to pay Netflix if it abandons their agreed deal, as well as $1.5bn in fees linked to Warner Bros’ debt refinancing.

Under the terms of its deal, Netflix has the right to match any improved bid tabled by Paramount.

Risk of monopoly

Paramount, led by Larry Ellison’s son David Ellison, is seeking to highlight the regulatory uncertainty surrounding Netflix’s bid.

The US Department of Justice (DoJ) has launched a competition review into the takeover amid concerns that merging two of the largest US streaming services – Netflix and Warner’s HBO Max – could hand the combined company monopoly power.

Ted Sarandos, Netflix’s co-chief executive, has played down competition concerns.

The company is planning to tell regulators that by bundling Netflix and HBO Max together, it will bring down overall streaming costs for consumers. Nevertheless, Netflix has admitted it could face up to 18 months of regulatory scrutiny.

Story Continues

Paramount, which, unlike Netflix, is seeking to buy Warner Bros’ cable channels including CNN, would likely also face regulatory scrutiny for its proposed deal. However, bosses have argued its approach offers greater certainty.

Netflix said Paramount had “repeatedly mischaracterised the regulatory review process by suggesting its proposal will sail through, misleading WBD stockholders about the real risk of their regulatory challenges around the world”.

It added: “WBD stockholders should not be misled into thinking that Paramount Skydance has an easier or faster path to regulatory approval – it does not.”

Paramount and Netflix have been contacted for comment.

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