Warner Bros Discovery has told its shareholders to reject Paramount Skydance's US$108.4bn takeover bid.
Paramount had said its offer was "superior" to a $72bn deal that Warner Bros struck with Netflix for its film and streaming businesses.
But in a dramatic plot twist in the story of who will take control of one of Hollywood's oldest and most famous movie studios, Warner Brother's board "unanimously" recommended rejecting the offer and agreed the deal with Netflix was in the firm's best interests.
The media giant put itself up for sale in October after receiving "multiple" expressions of interest from potential buyers, including approaches from Paramount Skydance.
On 5 December, Warner Bros Discovery said it had agreed to sell its film and streaming businesses to Netflix.
In a lengthy legal filing, Warner Bros Discovery's board said the offer from Paramount poses numerous and significant risks, and strongly rejects the idea that the Ellison family - one of America's richest - is financially supporting the bid.
Paramount is backed by the billionaire Ellison family, which has close ties to the president.
In a reflection of where power now lies in the entertainment industry, the Warner Bros board says the offer from streaming giant Netflix is well financed and offers better long term value to shareholders.
Netflix welcomed the recommendation from Warner Bros.
Ted Sarandos, Netflix's co-chief executive, called the company's merger agreement "superior" and "in the best interest of stockholders".
In a letter to Warner Bros shareholders, Netflix reiterated its stance that its bid for Warner Bros involves a clearer funding structure and less regulatory risk.
Paramount could still come back with another offer, meaning the take-over saga gripping Hollywood isn't over yet.
