Paramount Skydance on Monday launched a hostile bid worth $108.4 billion for Warner Bros Discovery, throwing a wrench into the deal with Netflix in a last-ditch effort to create a media powerhouse that would challenge the dominance of the streaming giant.
Shares of WBD rose over 7% on the news while Paramount Skydance gained 2%; Netflix fell 2%.
The streaming giant had emerged victorious on Friday from a weeks-long bidding war with Paramount and Comcast, securing a $72 billion equity deal for Warner Bros Discovery's TV, film studios and streaming assets.
The offer, which is worth $82.7 billion including debt and comes with a $5.8 billion break-up fee from Netflix, is likely to face strong antitrust scrutiny.
Paramount submitted multiple offers starting in September to forge an entertainment powerhouse capable of challenging Netflix and tech giants such as Apple that have expanded into media but faced rejections.
It has offered to buy the whole company at $30 per share, compared with Netflix's nearly $28 per share offer for its assets.
Paramount remains one of Hollywood's major studios, but its box office record has been uneven, with occasional franchise wins offset by periods in which its slate has trailed Disney, Universal and Warner Bros in U.S. market share.
It had sent a letter to Warner Bros, questioning the sale process and alleging the company has abandoned a fair bidding process and predetermined Netflix as the winner.
That followed reports that Warner Bros' management called the Netflix deal a "slam dunk" while speaking negatively about Paramount's offer.
Analysts and industry experts see Paramount as the best candidate for acquiring Warner Bros Discovery, given Ellison's deep pockets - backed by his father, Oracle co-founder and the world's second-richest person Larry Ellison and the close ties with the Trump administration.
U.S. President Donald Trump told reporters on Sunday the Netflix-Warner Bros combo could raise market share concerns and he would have a say on the deal.
Bloomberg News has reported Trump met Netflix co-CEO Ted Sarandos in mid-November, telling the executive Warner Bros should sell to the highest bidder.
Netflix's bid has already drawn sharp criticism from bipartisan lawmakers and Hollywood unions on concerns that it could lead to job cuts as well as higher prices for consumers.
The combined company will have substantial overlap and its combined streaming revenue would decline unless Netflix doubles its prices or runs separate platforms, neither of which the brokerage expects, Morningstar analysts have said.
Looking to allay antitrust fears, Sarandos had said the deal would drive value for consumers, shareholders and talent, saying Netflix is "highly confident" in the regulatory process.
Analysts said Netflix's motivation would stem from securing exclusive, long-term control over premium IP and reducing reliance on external studios as it expands into gaming, live entertainment and broader consumer ecosystems.
Access to WBD's vast IP trove would provide immediate credibility, audience reach and merchandising potential for its gaming ambitions, an area where Netflix is still building original content and brand recognition.