On Thursday, Warner Bros. Discovery said Paramount Skydance’s latest proposal of $31 per share qualifies as a “Company Superior Proposal” under its existing merger agreement with Netflix.

That decision gave Netflix four business days to respond with a better offer, but Netflix chose not to.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” said Netflix co-CEOs Ted Sarandos and Greg Peters in a statement.

“However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”

Warner Bros. Discovery must now pay Netflix a $2.8 billion termination fee to exit their agreement, however, Paramount Skydance has agreed to cover that cost as part of its revised bid.

The offer values Warner Bros. Discovery at about $111 billion. It includes the company’s film and television studios, HBO, its streaming platforms, gaming arm and cable networks such as CNN, TNT, TBS, Discovery and HGTV.

Paramount itself was acquired last year by Skydance Media, controlled by David Ellison. The deal was backed by his father, Larry Ellison, the executive chair of Oracle and one of the world’s richest men.

Larry Ellison has agreed to provide additional equity if required to support the financing.

Paramount will also take on roughly $33 billion of Warner Bros Discovery’s debt. The acquisition is backed by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi and Apollo Global Management.

Netflix first moved on Warner Bros. Discovery in December with an offer worth nearly $83 billion for its studios and streaming business. Paramount countered several times.

At one point, it offered $108 billion for the full company, including its traditional television networks. Its latest $31-per-share bid ultimately prevailed.

Warner Bros. Discovery’s board said it reached its decision after consulting independent financial and legal advisers. While the Netflix agreement is technically still in place during the notice period, the board confirmed it has informed Netflix of its determination.

David Ellison has already warned that job cuts are likely once the transaction closes. His growing influence in news media has drawn attention, especially following changes at CBS, another asset under his control. Larry Ellison is a primary donor and supporter of President Donald Trump.

Shortly after, Netflix shares rose by as much as 10% in after-hours trading in New York while Paramount shares gained about 4.5%.

Warner Bros. Discovery has filed the required documents with the US Securities and Exchange Commission in relation to both the Paramount tender offer and its earlier agreement with Netflix.

Shareholders have been advised to review those filings in full before taking any action.

This comes nearly two months after Warner Bros rejected Paramount’s initial $30-a-share bid in favour of a deal to sell its streaming and studio businesses to Netflix.

Warner Bros’ board said Paramount has addressed many issues noted in previous offers. “To be clear, our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger,” Warner Bros Chairman Samuel DiPiazza Jr. and CEO David Zaslav wrote in a letter to Paramount.

“We continue to recommend and remain fully committed to our transaction with Netflix.”

Warner Bros. Discovery Board Weighs Paramount’s Sweetened $30 Per Share Bid

Paramount has offered to increase its bid to $31 per share if Warner Bros agrees to open formal talks. The company has also provided a personal guarantee of $40 billion in equity from Oracle founder Larry Ellison, father of Paramount CEO David Ellison.

Warner Bros said it expects Paramount’s best and final offer to exceed that amount.

Paramount’s latest attempt to win over shareholders includes extra cash for each quarter the deal fails to close and covering the $2.8 billion breakup fee Warner Bros would owe Netflix if the merger falls through.

Despite these concessions, Warner Bros said Paramount’s offer still leaves important issues unresolved, including coverage of potential $1.5 billion junior lien financing fees and full certainty of equity funding.

The Netflix deal, which values Warner Bros’ studios and streaming assets at $82.7 billion, is still the board’s recommended option.

Shareholders are scheduled to vote on the merger on March 20, after Warner Bros spins off its Discovery Global cable operations into a separate public company.

Discovery Global includes CNN, TLC, Food Network, and HGTV and could fetch between $1.33 and $6.86 per share, according to Warner Bros estimates.

Paramount has also pushed to nominate directors to Warner Bros’ board, with Pentwater Capital CEO Matt Halbower among potential candidates. “Every substantive complaint that the Warner Bros board had with Paramount’s previous offer has been addressed,” Halbower said last week.

Activist investor Ancora Holdings, which owns nearly $200 million in Warner Bros shares, has urged the company to fully engage with Paramount’s proposal. Netflix, meanwhile, acknowledged the renewed talks but reaffirmed its confidence in the merger.

“While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics,” Netflix said.

Paramount Skydance’s market value stands at $11.1 billion, with shares trading around $10.32. Warner Bros Discovery’s market cap is roughly $69.4 billion, with shares at $27.99.

Netflix is by far larger at $324.6 billion, trading near $76.87. Analysts say this scale explains why the Netflix offer is seen as more stable despite its lower total dollar value.