Warner Bros. Discovery recommended on Wednesday that its shareholders reject Paramount's offer to buy the company and instead accept Netflix's offer.

According to Warner Bros., a Netflix takeover would better serve both the company's interests and its audiences.

In a letter to its shareholders, Warner Bros. called Paramount's offer "inferior," also adding it included "significant risks and costs" due to its reliance on borrowed funds.

However, Netflix's offer is backed by a streaming giant worth more than $400 billion (€340 billion).

"We are confident that our merger with Netflix represents superior, more certain value for our shareholders," Warner Bros. said.

Warner Bros. agreed to Netflix's 72-billion-dollar offer, which includes both cash and stocks, so that the latter would purchase its movie studios, as well as HBO's catalogue.

Separating cable channels from company

The Warner Bros. shareholders will have until January 8 to respond to the offer, with the company's board also voicing its worries about foreign investors being involved.

Whichever offer that ends up being accepted is set to be subjected to scrutiny by the authorities in the US. Paramount argued its offer is more likely to have an easier path to the authorities' approval.

Warner Bros. will have to sell its cable TV assets, which include news outlet CNN and science channel Discovery, which would have to be completed before a potential Netflix purchase..

Critics of the deal say a Netflix purchase of Warner Bros. would result in a significant market dominance by the streaming company, a sentiment also echoed by US President Donald Trump, who said such a deal "could be a problem."

Edited by: Dmytro Hubenko