The board of Warner Bros Discovery Inc (NASDAQ:WBD) has rejected the $108 billion takeover bid from Paramount Skydance Corp (NASDAQ:PSKY) after a key backer was reported to have pulled out.
Shares in WBD fell 1% to $28.60 in premarket trading on Wednesday.
In a statement, directors unanimously reiterated their backing for the Netflix merger and recommended that shareholders reject Paramount's offer.
Board chair Samuel Di Piazza Jr said: "Following a careful evaluation of Paramount's recently launched tender offer, the board concluded that the offer's value is inadequate, with significant risks and costs imposed on our shareholders.
"This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals.
"We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination."
Overnight, investment firm Affinity, owned by President Donald Trump's son-in-law Jared Kushner, had backed the bid from Paramount but said overnight that it is pulling out.
Affinity said in a statement: "With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity.
"The dynamics of the investment have changed significantly since we initially became involved in October. We continue to believe there is a strong strategic rationale for Paramount’s offer."
This swings the odds back to Netflix, which agreed $72 billion deal in early December, despite reported antitrust concerns in the streaming market that President Trump said last week "could be a problem".
Paramount's bid was backed by RedBird Capital Partners, and an aggregate $24 billion commitment from sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi.
In June, three years after Warner Bros Entertainment merged with Discovery Inc, WBD announced its plan to split into two again; it planned to form one company holding TV and film studios as well as the HBO Max streaming service, with the other business focused on Discovery's cartoon, news and sports TV channels.
** UPDATE: Adds statement from WBD **