Warner Bros is reportedly set to reject a hostile $108bn (£81bn) takeover bid from Paramount, with one of the prospective buyer's financing partners confirming it's pulled out of the offer.
A spokesman for investment firm Affinity, owned by Donald Trump's son-in-law Jared Kushner, told Sky News' US partner network NBC News "the dynamics of investment have changed significantly".
It had backed Paramount's bid, along with funds from Saudi Arabia and other Middle Eastern countries.
Bloomberg and The Wall Street Journal report the Warner Bros Discovery board are set to advise shareholders to reject Paramount's bid - paving the way for Netflix, which had struck a $72bn (£54bn) deal.
If the takeover goes through, it would give the streaming giant the rights to hit Warner franchises like Harry Potter, Batman, and Game Of Thrones, as well an extensive back catalogue of classic films.
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It is the latest twist in a takeover saga where the winner will acquire a huge advantage in the streaming wars.
In June, Warner announced its plan to split into two companies - one for its TV, film studios and HBO Max streaming services, and one for the Discovery element of the business, which primarily comprises legacy TV channels that show cartoons, news, and sports.
Netflix agreed a $27.75 per-share price with the firm, which equates to the $72bn purchase figure deal to secure its film and TV studios, with the deal giving the assets a total value of $82.7bn.
However, Paramount said its offer would pay $30 (£22.50) cash per share, representing $18bn (£13.5bn) more in cash than its rival offered. The offer was made directly to shareholders, asking them to reject Netflix's deal, in what is known as a hostile takeover.
The Paramount deal would involve rival US news channels CBS and CNN being brought under the same parent company.
Read more:
Why is Warner Bros for sale and how is Trump involved?
The US government will have a big say on the final deal, with the winning company likely facing the Department of Justice's (DOJ) Antitrust Division, a federal agency which scrutinises business deals to ensure fair competition.
(c) Sky News 2025: Warner Bros set to rebuff hostile takeover bid - as major backer pulls out of deal
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