WASHINGTON — Netflix bowed out of the Warner Bros. Discovery sweepstakes Thursday, conceding the prize to Paramount Skydance, a dramatic capstone to one of Hollywood’s biggest auctions in years.

The reversal came after Warner Bros. Discovery switched gears, announcing that Paramount‘s revised bid had topped the one on the table from Netflix.

Netflix had been given four business days to regroup and potentially submit a higher offer; but late Thursday, Netflix announced that it had no intention to raise its bid.

“We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” Netflix Co-Chief Executives Ted Sarandos and Greg Peters said in a statement.

Netflix also felt pressure from its investors. The streaming giant’s stock, which edged up 2.3% Thursday to close at $84.59, has been pounded since it initially emerged as the top bidder in December with a deal valued at $82.7 billion.

The streaming giant’s flagging stock and mounting resistance to its deal in Washington appears to have contributed to the decision to pull the plug on its effort to bulk up with HBO, HBO Max, the storied Burbank studios and its spacious film campus.

In addition, Paramount Chairman David Ellison and his billionaire father Larry Ellison, who is backing the deal, demonstrated they had mettle and determination to out-spend and outlast their competitors in their quest to build a new entertainment juggernaut.

The elder Ellison, who is close to Trump, also leveraged his close ties with the administration to support Paramount’s bid and cast doubt on Netflix’s chances.

The Warner Bros. deal comes just six months after the Ellison family completed its purchase of Paramount, vastly increasing their clout in the industry. In the coming months, the family could own two huge pieces of Hollywood history, two major news organizations — CNN and CBS News — and two middling streaming services.

David Ellison began his dogged and unsolicited pursuit of the larger media company five months ago.

His prospects dramatically improved on Thursday when Warner Bros. Discovery said its board, in consultation with its bankers and lawyers, determined Paramount’s most recent offer constitutes a “superior proposal,” compared to the Netflix deal.

Paramount on late Monday offered to buy all of Warner Bros. Discovery for $31 a share in cash. Paramount had previously bid $30 a share.

Paramount’s enhanced proposal contained several key sweeteners, including a commitment from the tech billionaire, through his Ellison Trust, to guarantee $45.7 billion in equity financing.

Larry Ellison, one of the world’s richest men and co-founder of Oracle, is personally backing his son’s bid. Warner Bros. Discovery had previously demanded that Paramount line up more secure financing.

Netflix had offered $27.75 a share for Warner’s HBO, HBO Max and the Warner Bros. film and television studios in Burbank. Concerns had been growing that Netflix would face push-back from regulators as it tried to swallow the historic film and TV studios behind “Superman,” “Harry Potter,” “The Matrix” and “The Pitt.”

Netflix officials were in Washington on Thursday to press their case with Justice Department antitrust regulators before the company later announced it was bowing out.

“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing,” said David Ellison in a statement..

Paramount also agreed to pay a $2.8-billion break-up fee that Warner would owe Netflix for backing out of the deal signed Dec. 4. Among its other concessions, Paramount agreed to increase the $31-a-share offer a bit more should the regulatory review stretch beyond October. It also agreed to pay $7 billion should the deal fail to garner the blessing of regulators.

Bank of America Merrill Lynch, Citi and Apollo have agreed to provide $57.5 billion in debt financing.

“The outcome now appears to be what we had expected all along: Paramount Skydance and Warner Bros are set to attempt a combination,” TD Cowen media analyst Doug Creutz said in a Thursday note to investors.

The upset came as the auction has taken on increasingly political dimensions. Sarandos had made a trek to the White House on Thursday at a pivotal moment for the streaming giant.

Sarandos met with White House staff members and Justice Department officials, according to two people familiar with the meeting. The visit was arranged more than two weeks ago and Trump was not scheduled to attend.

The White House and Netflix declined to comment on the substance of the meeting, but it came just days after the media giant has come under pressure by the president to fire board member Susan Rice, a former Biden administration advisor that Trump recently called a “political hack.”

Trump warned that if Netflix did not fire Rice, the company would “pay the consequences.”

The president’s demands to fire Rice marked a shift in the president’s involvement with Netflix’s business as it seeks to acquire Warner Bros.

Paramount executives have leaned into a multi-pronged strategy to scuttle the Netflix deal since December.

The Department of Justice has since opened an investigation to determine whether to try to block Netflix’s proposed deal to take over Warner. Netflix has more than 300 million subscribers worldwide, and the addition of Warner’s HBO Max would have made the streaming giant even more dominant.

Paramount had been gaining momentum as they angled to thwart Netflix.

During a Senate hearing this month, some Republican lawmakers blasted Sarandos, raising questions about potential antitrust concerns and some of Netflix’s programming. David Ellison declined an invitation to participate in the Feb. 3 hearing.

This week, he was at the Capitol as a guest of Sen. Lindsey Graham (R-S.C.) for Trump’s State of the Union address. The two men were pictured giving a thumbs-up in a photo circulating on social media.

Trump has said he would stay out of the Netflix-versus-Paramount battle, but over the weekend he demanded, in a social media post, that Netflix “IMMEDIATELY” fire Rice from its board.

It was not known if the topic of Rice came up Thursday.

Sarandos has sought to downplay the controversy, saying during a BBC interview: “This is a business deal, it’s not a political deal.”

Paramount has enlisted a former Trump administration official, the lawyer Makan Delrahim, who served as Trump’s antitrust chief during the president’s first term.

In a confident move, Delrahim filed to win the Justice Department’s blessing in December — even though it didn’t have an agreement with Warner Bros. Discovery’s board, a requirement for the deal to advance. Earlier this month, a deadline for the Justice Department to raise issues with Paramount’s proposed Warner takeover passed without comment from the Trump regulators.

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