Warner Bros Discovery has entered exclusive talks to sell its streaming and Hollywood studio business to Netflix, a move that would dramatically change the established film and TV landscape.

Netflix is in competition with Paramount Skydance and Comcast, which owns assets including Universal Studios and Sky, to buy the owner of the Hollywood studio Warner Bros, HBO and the HBO Max streaming service.

Netflix is offering a $5bn (£3.7bn) breakup fee if the deal fails to gain regulatory approval in the US, according to Bloomberg, which first reported the exclusive talks.

Warner Brothers Discover shares are currently about $24, giving it a market value of about $60bn. Netflix has reportedly offered between $28 and $30 a share, suggesting its bid could be worth between $70bn and $75bn.

Analysts have warned that the deal could spark competition concerns as it would result in the combination of two of the biggest streaming services in the US.

Netflix has given assurances that it will continue to allow the Warner Bros film studio, home to franchises such as Harry Potter and Batman, to continue to have wide cinematic releases.

Prior to the closing of any deal, Warner Bros Discovery will complete a planned spin-off of its cable channels, which include CNN, TBS and TNT.

A deal would result in Netflix becoming the owner of HBO, the maker of hit shows including Succession, The White Lotus, The Sopranos and Game of Thrones, as well as an extensive TV archive that includes classics such as Friends, which is soon to be unavailable on Netflix.

Warner Bros formally put itself up for sale in October after receiving interest from several parties.

Earlier this week, James Cameron, the director of Titanic and the Terminator and Avatar series, warned that a sale to Netflix would cause a “catastrophic loss of long-term value” for the entertainment industry.

Paramount, run by David Ellison and bankrolled by his billionaire father and Oracle founder, Larry, had been seen as the early frontrunner.

Paramount, which owns assets including Channel 5 in the UK, had also offered a $5bn termination fee if a deal is agreed but fails to get regulatory clearance.

Earlier this week, Paramount argued in a letter to Warner Bros that its bid was most likely to gain regulatory clearance.

Paramount accused Warner Bros of operating an unfair auction process that favoured Netflix. In the letter from litigation counsel the company called the process “tainted”.

Warner Bros, Netflix, Comcast and Paramount declined to comment.