Warner Bros. Discovery is revisiting a potential sale to Paramount Skydance, opening the door to renewed negotiations after weeks of pressure and a sweetened offer from Paramount. However, the company’s board still favors a competing proposal from Netflix, according to sources familiar with the matter.

The move comes after Paramount submitted an enhanced offer last week, addressing some concerns Warner Bros. Discovery had previously raised. Paramount’s persistence has attracted the attention of some Warner investors, prompting the board to reconsider its options. On Tuesday, Warner Bros. Discovery sent a letter to Paramount Chairman David Ellison and other board members, requesting a more detailed proposal within seven days – setting a February 23 deadline for a final offer.

“We seek your best and final proposal,” the letter stated, signaling an opportunity for Paramount to present a compelling case that could potentially sway the board.

The potential sale of Warner Bros. Discovery, a media giant responsible for iconic brands like “Batman,” “The Big Bang Theory,” “Casablanca,” and HBO – the home of “Game of Thrones” and “Succession” – is poised to significantly reshape the Hollywood landscape.

This development occurs as both Warner Bros. Discovery and Netflix approach the final stages of their auction. Warner Bros. Discovery has scheduled a special shareholder meeting for March 20 to decide the company’s future and is currently recommending that stockholders approve the $82.7 billion Netflix deal.

“We continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk,” Warner Chairman Samuel A. Di Piazza, Jr., said in a statement released Tuesday.

Despite the preference for Netflix, reopening talks with Paramount allows the latter to potentially influence board members and possibly even prompt Netflix to increase its $27.75 a share offer for Warner’s Burbank-based studios and programming library, including HBO and HBO Max.

Notably, Netflix is not interested in acquiring Warner Bros. Discovery’s basic cable channels, including CNN, TBS, HGTV, and Animal Planet, which are slated to be spun off into a separate company. Paramount, in contrast, is seeking to acquire the entire company and has offered more than $30 a share.

Last week, Paramount sweetened its bid by offering a $2.8 billion “break fee” to Warner Bros. Discovery should the company terminate the agreement with Netflix. Paramount pledged to pay Warner investors a “ticking fee” of 25 cents a share for each quarter the deal remains unclosed after January 1.

“While we have tried to be as constructive as possible in formulating these solutions, several of these items would benefit from collaborative discussion to finalize,” Paramount stated last week, seeking a chance to further refine its proposal.

Netflix granted Warner Bros. Discovery a seven-day waiver from their existing merger agreement to facilitate these renewed discussions with Paramount, which initially lost the bidding war on December 4.

“We granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter,” Netflix said in a statement Tuesday. “This does not change the fact that we have the only signed, board-recommended agreement with WBD, and ours is the only certain path to delivering value to WBD’s stockholders.”

Netflix also reaffirmed its confidence in securing regulatory approval and highlighted its matching rights for any improved offer from Paramount. The company cautioned against Paramount’s claims of a smoother regulatory path, stating, “PSKY has repeatedly mischaracterized the regulatory review process… misleading WBD stockholders about the real risk of their regulatory challenges around the world.”

Warner Bros. Discovery acknowledged that Paramount’s recent modifications addressed “some of the concerns that WBD had identified several months ago,” according to the letter to Paramount. However, the company also emphasized that Paramount’s offer “still contains many of the unfavorable terms and conditions… and twice unanimously rejected by our Board.”

The board indicated its willingness to engage with Paramount during the seven-day negotiation period, marking a significant development in the ongoing saga. Paramount has been pursuing these assets since September, and the outcome of these negotiations will undoubtedly have far-reaching implications for the future of Hollywood.

“Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them,” Warner Chief Executive David Zaslav said in a statement. “We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders.”