Warner Bros Discovery (WBD) opened the door on Tuesday to Paramount Skydance after the rival bidder raised its offer to $31 per share.

The intense bidding war for the studio behind Batman and Harry Potter has reached a fever pitch, with the board signaling that Netflix may lose its place as the preferred suitor.

Paramount enticed Warner's board back to the bargaining table last week by raising the possibility of an improved cash offer for Warner shareholders. In its revised bid, Paramount raised the termination fee it would pay should the deal fail to gain regulatory approval, to $7 billion — up from $5.8 billion. It also agreed to pay Warner shareholders 25 cents per share per quarter, for every quarter beyond September 30 that the deal does not close.

READ MORE: Netflix weighs amending Warner Bros bid to make it all cash

The rival bidder also agreed to contribute more equity, should banks raise concerns about Paramount's ability to finance the deal when it closes.

Warner's board said it has not determined whether the revised Paramount proposal is superior to the merger with Netflix, but that directors will engage further. Should a superior deal emerge, Netflix has four business days to revise its offer.

Netflix declined to comment.

"Paramount welcomes the WBD Board's determination and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount's proposal to WBD shareholders, the creative community and consumers," Paramount said in a statement.

The fight over Warner Bros is complicated by the fact that Netflix and Paramount are bidding for different sets of assets. Paramount's bid, now at $31 per share in cash, is for the whole company. Netflix has offered $27.75 per share in cash, a total of $82.7 billion including net debt, for the movie and television studios, its catalog and HBO Max streaming service. Warner Bros plans to spin off its television division into a separately traded company, Discovery Global.

The value of Netflix’s bid depends partly on the debt level of Discovery Global and its equity value once it starts trading.

Warner's board estimates Discovery Global could fetch between $1.33 and $6.86 a share, potentially lifting the total return to shareholders above Paramount's earlier $30 a share offer.

"We expect shareholder lawsuits if Netflix is the ultimate winner, and because the deals are not apples to apples—with the suitors not vying for identical assets and other details surrounding the respective bids requiring discretion—determination of which deal is better will always be subjective," wrote Matthew Dolgin, senior equity analyst at Morningstar.

Warner Bros will publish quarterly results this week, potentially giving a better picture of the cable television assets' value. Paramount reports results Wednesday.

Shares of both potential buyers have fallen during the saga. "Given how much the market cap for Netflix and Paramount have fallen since this bidding war has started, it is reasonable to question if an increased bid from either company is actually driven by business interests rather than ego," said Ross Benes, senior analyst at eMarketer.

High-stakes battle

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.

Netflix has ample cash and could bump up its offer for the HBO Max owner.

Paramount, though, has argued it has a clearer path to US regulatory approval than Netflix, and it earlier 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 its possible director candidates could be one of Warner Bros' biggest shareholders, Pentwater Capital Management's chief executive Matthew Halbower.

READ MORE: Warner Bros plans to reject Paramount bid on funding, terms

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

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

The company earlier this month said it would hold a shareholder vote on the Netflix deal on March 20.