The battle for Warner Bros Discovery (WBD) is entering a new phase, with Paramount Skydance shifting to what insiders describe as a “wait and watch” strategy as Netflix’s rival bid comes under growing financial and regulatory pressure.

Netflix agreed in December to buy WBD’s studios and HBO assets for about A$124 billion, or about A$42 a share, using a mix of cash and stock, while leaving shareholders with a spun-off cable business.

Paramount Skydance, led by David Ellison and backed by Oracle co-founder Larry Ellison (pictured) and RedBird Capital, has countered with an all-cash offer of about A$163 billion valuing WBD at about A$45 a share, but the WBD board has so far rejected it as riskier and more highly leveraged.

After failing to sway the board or shareholders with multiple approaches, sources close to the talks say Paramount is now betting that the Netflix deal’s weaknesses will become more obvious over time.

One of the biggest concerns is regulatory risk in the US, where the Trump administration has signalled a tougher stance on big tech and media consolidation. A Netflix-WBD tie-up would unite two of the world’s largest streaming platforms, almost certainly triggering a prolonged review and the possibility of a court challenge.

There are also growing investor concerns about the financial structure of Netflix’s offer.

Netflix’s market value has fallen sharply during the bidding war, weakening the stock component of its proposal.

Meanwhile, the planned spin-off of WBD’s cable networks is expected to be heavily indebted, raising doubts about how much value shareholders will ultimately receive from that side of the deal.

Some major investors are split. Value investor Mario Gabelli has publicly backed Paramount’s all-cash bid, calling it simpler and more certain. Others, including Harris Oakmark, support the board’s view that Netflix’s financing is more secure and avoids the risks of what would be the largest leveraged buyout in history.

For now, Paramount Skydance is signalling it may not immediately raise its offer again, instead betting that regulatory delays, market volatility and deal complexity could yet derail Netflix’s “winning” bid, reopening the door for a cash buyer in a nervous market.