Netflix Inc.

has agreed an US$83 billion takeover of

Warner Bros Discovery

, in a deal that hands it one of Hollywood’s most celebrated studios and creates a global entertainment powerhouse.

The transaction will transform Netflix into the dominant player in Hollywood, adding a coveted library of content including the Harry Potter and Batman franchises, WBD’s streaming business and the premium programming of HBO.

Under the takeover, WBD will continue with the planned spin off of its cable television networks, including CNN, Discovery and Turner, into a separate company before the studios and streaming businesses are sold to Netflix.

In an auction that kicked off in October and was overseen by WBD boss David Zaslav, Netflix saw off competition for the businesses from Paramount and Comcast.

Announcing the deal on Friday, Zaslav said: “By coming together with Netflix, we will ensure people everywhere will continue to enjoy the world’s most resonant stories for generations to come.”

As part of the agreement, each WBD shareholder will receive US$23.3 in cash and US$4.5 worth of Netflix shares. The transaction gives WBD an enterprise value, including debt, of US$82.7 billion. Its equity is valued at US$72 billion.

The transaction was unanimously approved by the boards of both Netflix and WBD, but needs to approved by WBD shareholders and pass regulatory scrutiny. The transaction is expected to close in 12-18 months, the companies said.

Zaslav is set to stay as the head of the new WBD studios, which will be kept operationally separate from Netflix to make and distribute movies and TV shows.

The deal will hand Netflix control of the one of the leading film and TV production and distribution pipelines, which will give the tech group unprecedented power in Hollywood. Netflix has promised to maintain to maintain Warner Bros’ theatrical releases for films.

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The combination of Netflix and WBD will prove a test for regulators in the United States and Europe, where both companies have extensive operations.

Those close to the deal said that they were confident any regulatory hurdles could be overcome, pointing to the fierce competition for global audiences not just from rival streamers but also platforms such as YouTube.

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