Netflix has backed away from its proposal to buy Warner Bros. Discovery, clearing the way for Paramount-Skydance to win a months-long battle for one of Hollywood's most storied studios.

Warner Bros., which put itself up for sale last year, on Thursday said Paramount's latest bid was "superior" to Netflix's, which in turn refused to raise its offer.

Netflix executives said they have declined to match Paramount Skydance's bid as "the deal is no longer financially attractive" at that price.

The winner of the bidding war would gain control of the iconic studio along with its films and media networks - a takeover that could significantly reshape the media landscape.

Paramount had boosted its offer days ago, agreeing to increase its purchase proposal by $1 per share.

"The transaction we negotiated would have created shareholder value with a clear path to regulatory approval," Netflix co-chief executives Ted Sarandos and Greg Peters said in a statement. "However, we've always been disciplined."

"This transaction was always a 'nice to have' at the right price, not a 'must have' at any price," the Netflix executives added.

The announcement came just hours after Sarandos had visited the White House on Thursday.

The announcement on Thursday caps off a dramatic months-long saga that, if approved by regulators, is likely to reshape Hollywood. It could also have serious ramifications for the future of one of the US's biggest news brands, CNN.

The news network has frequently clashed with Trump over its coverage of his policies, drawing ire from the president.

Trump said in December that he believed CNN should be sold as part of any Warner Bros deal. He called the people running CNN "corrupt or incompetent" and said they should not be entrusted to run the network.

CNN head Mark Thompson sent an email to employees as news spread of the all-but-assured deal, telling workers not to "jump to conclusions about the future until we know more", US media reported.

Last December, Warner Bros agreed to a takeover offer from Netflix for some of its assets. But Paramount, which is backed by tech billionaire Larry Ellison and led by his son David, made a rival offer as it looks to transform itself into a Hollywood heavyweight.

Paramount had previously been rebuffed by Warner Bros.

On Thursday, chief executive David Ellison welcomed the Warner Bros board's decision in favour of Paramount's sweetened offer. The proposal, he said in a statement, offers Warner Bros shareholders "superior value, certainty and speed to closing".

If Paramount's deal is approved by regulators, the company would fold Warner Bros' HBO Max streaming customers into its portfolio. It would also take ownership of CNN, the Food Network and a range of sports offerings.

Paramount's traditional networks already include brands such as Nickelodeon, CBS and Comedy Central.

Many in Hollywood have viewed the bidding war between Netflix and Paramount as a battle with no good winner.

Critics of a deal with Netflix voiced concern that the storied movie studio would be lost to the Silicon Valley streaming titan, paving the way for the depletion of cinema. But a merger with Paramount, which has touted itself among the last standing movie studios in Hollywood, also left critics unnerved over the company's perceived political connections to the Trump administration - a concern that has also riled the media landscape over the future of CNN.

Across the board, the selling of Warner Bros will have massive ramification across Tinsel town, with all but assured cuts to staff in a city that has been marred by continued production cuts.

In December, the Warner Bros 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.

But in a last-ditch push, Paramount this week agreed to pay more for a Warner Bros takeover. The company offered $31 per share in cash, up from $30 per share to take over the entire company.

It 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.