Warner Bros. Discovery's board says Paramount's latest offer is better than Netflix's. Here's what happens next.

• Warner Bros. Discovery's board said it thinks Paramount's latest offer is better than Netflix's.
• Paramount raised its bid to $31 per share for all of WBD on Tuesday morning.
• Netflix must decide whether it's willing to offer more for the Warner Bros. studio and HBO assets.

Update: Shortly after this story was published, Netflix announced that it would not raise its bid for WBD.

Paramount Skydance may finally have the upper hand on Netflix in the bidding war for Warner Bros. Discovery.

The WBD board announced on Thursday afternoon that it believes Paramount's improved offer to buy the entire company for $31 per share is better than Netflix's proposal to buy its streaming and studio assets for $27.75 per share. Both offers are all cash.

Paramount's bid also includes a so-called "ticking fee," which will pay WBD shareholders $0.25 per share, or about $650 million, for every quarter that its deal doesn't get regulatory approval, starting September 30.

Netflix now has four business days to raise its bid, if it chooses. It could also decide to walk away and collect a $2.8 billion breakup fee from WBD, which Paramount has said it will cover.

"While Netflix has the opportunity to increase its bid and reclaim WBD, the bigger question is if it's in Netflix's interest to continue pursuit," said Ross Benes, a senior analyst at EMARKETER, Business Insider's sister company. "Netflix and Paramount stocks have taken a hit since this bidding war started. Investors will not be keen on increasing bids further."

If Netflix doesn't improve its offer, WBD's board will formally change its recommendation and kill its Netflix deal. WBD shareholders will vote on March 20 to approve the transaction with the highest bidder.

Paramount and Netflix have each been on a mission to convince Hollywood, consumers, and government officials that they'd be the better buyer of Warner Bros.

David Ellison's Paramount is willing to pay WBD a $7 billion breakup fee if its deal is blocked by regulators, a sign of his confidence in winning over the US Department of Justice under President Donald Trump. (Netflix has agreed to pay WBD $5.8 billion if regulators blocked its deal.) Ellison would also need regulatory approval in Europe and could face challenges at the state level in the US.

Paramount has warned that Netflix would become an overpowering juggernaut if it bought HBO and the Warner Bros. studio. Netflix has argued that it competes with YouTube and traditional TV, not just paid streamers.

Netflix co-CEO Ted Sarandos has been on a charm offensive, telling politicians, the creative community, and the public that Netflix would create jobs if it bought Warner Bros. Sarandos visited the White House this week, Politico reported.

Trump said earlier this month he'd stay out of the process, though he said in December that Netflix's market share "could be a problem."

A White House spokesperson told Business Insider last week that Trump "has great relationships with all parties in this potential transaction and remains neutral in this process with no preference for either bidder."

Trump, however, said shortly after that Netflix should remove Susan Rice from its board and would otherwise "pay the consequences." Rice, who worked in the White House under Obama and Biden, was critical of Trump on a podcast and said companies that bow to him could face retribution. Sarandos downplayed Trump's comments, saying that the company's plan to buy Warner Bros. is "not a political deal."

Paramount has promised investors $6 billion in savings if it wins the bidding war, compared to Netflix's target of $2 billion to $3 billion. WBD's board, as recently as last week, expressed concern that could lead to an employee exodus if Paramount won control of the company.

Disclosure: Mathias Döpfner, the CEO of Business Insider's parent company, is a Netflix board member.