Netflix is preparing to revise its takeover offer for Warner Bros Discovery (WBD) into an all-cash deal, in a bid to outflank rival bidder Paramount Skydance.

According to reports from Bloomberg and the Financial Times, the streaming giant is considering dropping the shares component of its agreed US$82.7 billion (A$124bn) deal and instead paying WBD shareholders entirely in cash.

The move is aimed at simplifying the transaction and making it more attractive to investors uneasy about Netflix’s volatile share price.

Under the original agreement struck in early December, WBD shareholders were to receive US$23.25 in cash and US$4.50 in Netflix stock per share.

Since Netflix revealed its pursuit of Warner Bros in October, its shares have fallen by more than 20%, eroding the headline value of the offer and giving Paramount an opening.

Paramount, led by CEO David Ellison (pictured below) and backed by his father, Oracle co-founder Larry Ellison, has launched a US$108 billion all-cash bid for the entire WBD group, including its cable TV assets such as CNN.

It has taken its case directly to shareholders, threatened a proxy fight to replace WBD’s board, and this week sued the company seeking more detail on how it valued the Netflix deal and the planned spin-off of its cable networks.

The bidding war has turned into the most closely watched takeover battle in global media, with control of franchises such as Harry Potter, Game of Thrones, DC Comics, Friends and a vast classic film library at stake.

WBD’s board has so far backed Netflix’s proposal, arguing Paramount’s offer relies heavily on debt financing and carries greater execution risk. But some investors, including major shareholder Pentwater Capital, have warned they could vote down the Netflix deal if Paramount improves its terms.

Netflix has already lined up about US$59 billion in financing and begun refinancing part of that into longer-term debt, giving it scope to fund an all-cash offer.

News of the possible change lifted WBD shares about 1.6% overnight, while Netflix shares rose around 1%.