Paramount Skydance has boosted its proposal to buy Warner Bros Discovery, with an offer that could finally knock rival bidder Netflix out of the game.

Warner Bros, which put itself up for sale last year, said Paramount had agreed to increase its purchase offer by $1 per share, creating a bid that its board had determined "could reasonably be expected to lead to a ... superior proposal".

Warner Bros said it would engage in further talks before making a final decision about whether to abandon the deal it struck with Netflix in December.

Netflix, which would have four days to make a counteroffer, did not immediately comment.

In a recent interview with the BBC, Netflix co-chief executive Ted Sarandos declined to say whether the company was prepared to engage in a bidding war, calling the back-and-forth "part of the process".

"I don't want to do hypotheticals," he said, before the new Paramount bid was made. "We very much like the deal where we're at right now, we're very disciplined buyers, and we always have been."

"This is all a process of price-discovery," he added later.

Paramount, which is backed by tech billionaire Larry Ellison and led by his son David, has waged an outspoken campaign to buy Warner Bros since last year as it looks to transform itself into a Hollywood heavyweight.

But Warner Bros has so far spurned Paramount's offers. Instead, in December, it said it had agreed to sell its film and streaming divisions, including HBO, to Netflix in a deal worth $27.75 per share or roughly $82bn (£61bn), including debt.

Warner Bros said it would spin off the remainder of its business, including traditional television networks and the news channel CNN, as an independent company.

After getting rejected, Paramount has sweetened its original proposal, which called for paying $30 per share to take over the entire company. But this is the first time the company has officially agreed to pay more.

Warner Bros said Paramount had now offered to pay $31 per share in cash, with additional money due if completion is delayed.

It has also agreed to pay $7bn should the deal fall through and cover the $2.8bn fee Warner Bros had agreed to pay Netflix in the event of a break-up of the merger plan.

Warner Bros said its board had not made a final determination on what to do.

Lawmakers have raised concerns about both proposals, citing antitrust concerns and the impact on the broader entertainment industry.

In a hearing in Washington earlier this month, Sarandos faced questions about potential price rises and the future of cinemas.

The Ellison family's ties to the Trump administration have also drawn attention from Democrats.

Warner Bros said the firm would "engage further ... to determine if a proposal that constitutes a company superior proposal ... can be reached," it said.

In an interview before Paramount's offer was revealed, Luke Stillman, managing director at the US media and advertising consultancy Madison and Wall, said he thought Warner Bros was looking to create a bidding war. He said he thought the price could ultimately reach $33 per share.