Warner Bros. chose Netflix over Paramount — again. Now what?

(CNN) — Warner Bros. Discovery has officially rejected Paramount’s hostile takeover bid, advising its shareholders to do the same.

But the battle is far from over. Let’s break down what just happened and what to expect next.

So, what just happened?

Early Wednesday morning, Warner Bros. Discovery, CNN’s parent company, published a letter to shareholders and an SEC filing, formally rejecting Paramount’s latest offer for the entire company, deeming the hostile takeover bid “illusory.”

The current deal to sell Warner’s studios and streaming assets to Netflix, the board said, is still better for WBD shareholders.

Why did WBD reject Paramount?

Mostly, it’s about money: The WBD board said Paramount’s deal “provides inadequate value and imposes numerous, significant risks and costs on WBD.”

But WBD also called Paramount’s offer too risky. Its board wrote that Paramount had “consistently misled” WBD’s shareholders by claiming its $30-per-share, all-cash offer was “backstopped” by Paramount CEO David Ellison and his father, Larry Ellison, the Oracle co-founder worth an estimated $240 billion.

Meanwhile, in the background, lawmakers have raised national security concerns over Paramount’s use of financing from Middle Eastern partners.

What is Paramount saying?

The Ellisons insist they are fully backstopping the bid — guaranteeing funding if partners back out. But WBD’s letter refutes the claim: “It does not, and never has.”

Paramount last week claimed to have “air-tight financing,” and deemed any suggestion otherwise to be “absurd.”

And in its regulatory disclosures, Paramount said that sovereign wealth funds controlled by Saudi Arabia, Qatar and the United Arab Emirates would hold no voting power over WBD if the transaction is completed. However, the royal families’ involvement has only sharpened scrutiny of the Paramount offer.

What does Paramount do next?

Paramount now has the opportunity to come back with a higher, more firmly backstopped offer to WBD. However, the company’s initial statement after WBD’s rejection “affirms commitment” to its “superior” $30-per-share offer.

That posturing suggests the Ellisons will push forward by convincing WBD shareholders to tender their shares into Paramount’s current offer rather than accept Netflix’s offer for the streaming and studio assets.

This could turn into a long, drawn-out battle to win over shareholders. WBD board chair Sam DiPiazza told CNBC on Wednesday morning that the shareholder vote won’t happen until the spring or “early summer.”

Does Netflix need to do anything?

In the short run, not much. Netflix has already entered into its deal with Warner Bros., and now it must wait for WBD shareholders to vote on the matter.

But if Paramount comes back with a more lucrative offer and WBD accepts that new deal, Netflix would have an opportunity to counter. It would have to decide if WBD is still worth it at a higher price.

All the while, the streaming giant will need to remain disciplined, avoiding public missteps that could give Paramount (or future regulators) any openings, and reaffirming to WBD shareholders why their offer is the better deal.

What are regulators doing?

WBD said Wednesday it is working with regulators, who are reviewing its deal with Netflix.

In the meantime, Netflix has begun to assuage industry concerns about its potential ownership of WBD’s massive studio and streaming assets and the impact on theatrical film distribution.

On Tuesday, Sarandos made a surprise appearance at the Canal+ content showcase in Paris, where he told attendees that “Our intentions when we buy Warner Bros. will be to continue to release Warner Bros. studio movies in theaters with the traditional windows.”

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