Warner Bros. Discovery said Paramount Skydance's revised $31-a-share offer was superior to its existing deal with Netflix, giving the streaming giant four business days to respond or walk away from the bidding war for the coveted Hollywood studio.

The high-stakes battle could be in its final stretch after the announcement on Thursday.

Netflix had earlier this month granted Warner Bros. a seven-day waiver to seek a "best and final offer" from Paramount for the company.

Pursuant to the terms of the Netflix merger agreement, this notice initiates a four-business-day period during which Netflix may propose revisions to the agreement, Warner Bros. said.

Shares of Paramount Skydance were up more than 1.5% in extended trading.

Netflix, which is looking to buy Warner Bros.' streaming and studio businesses, agreed in December to pay $27.75 a share, saying the offer, along with a planned spinoff of Warner Bros.' cable assets, would deliver a greater shareholder value.

The bid partly depends on the debt level of those assets, which would be separately listed as Discovery Global, as well as the company's equity value once it starts trading.

Estimates of Discovery Global's value vary greatly. Warner Bros. said it could fetch between $1.33 and $6.86 a share, but Paramount said it is almost worthless.

MoffettNathanson analysts had said a Paramount bid of $34 a share would have ended debate about Discovery Global's value.

In its revised bid, Paramount raised the termination fee it would pay should the deal fail to gain regulatory approval, to $7 billion from $5.8 billion.

Netflix's Financial Muscle

With about $9.03 billion in cash and cash equivalents at the end of December, the creator of "Stranger Things" has ample financial muscle to raise its offer.

Either deal will reshape the power structure of Hollywood by handing the suitor one of the industry's most-coveted studios and an extensive content library, as well as lucrative entertainment franchises such as "Game of Thrones" and DC Comics.

Paramount has argued it has a clearer path to U.S. regulatory approval than Netflix and had indicated that if Warner Bros. rejects the new bid, it would be ready to launch a board challenge at this year's annual meeting.

One of Paramount's director candidates could be a big shareholder in Warner Bros., hedge fund Pentwater Capital Management CEO Matthew Halbower said.

Activist investor Ancora Holdings, which owns a small stake in Warner Bros., has also stepped up pressure on the HBO owner by saying the company did not adequately engage with Paramount.

Warner Bros. has previously said its board has a track record of acting in the best interests of the company and shareholders.