In a watershed move, Warner Bros. Discovery announced Friday it has agreed to sell its streaming and studios assets to Netflix in a deal valued at $82.7 billion, setting the stage for one of the most sweeping and consequential mergers in modern Hollywood history.

If approved by federal regulators, the transaction promises to create a new entertainment and media behemoth, uniting the world’s largest streaming destination with a storied 102-year-old film studio.

Warner Bros.’ portfolio includes HBO, the HBO Max streaming platform and the “Harry Potter” movie franchise. Netflix, home of “Stranger Things” and “Squid Game,” reaches more than 300 million paid subscribers across over 190 countries.

Netflix’s takeover of Warner Bros. ushers in a new era for Hollywood, which has evolved from a business focused on theatrical exhibition to an increasingly digital-first industry. The acquisition cements Netflix’s market dominance and expands the company’s content library as it faces off against tech giants like YouTube and TikTok.

The deal would give Netflix access to popular and lucrative intellectual property, including DC Comics characters such as Batman and Superman; the “Game of Thrones” TV saga; and a vast trove of titles stretching from “Casablanca” and “Dirty Harry” to “Dune” and “Barbie.”

In the lead-up to the announcement, Netflix attempted to reassure the creative community by reportedly promising to release Warner Bros. movies in brick-and-mortar cinemas. But many filmmakers are skeptical of Netflix’s business model, which prioritizes streaming distribution.

Warner Bros. Discovery, weighed down by billions in debt and lackluster streaming growth, formally put itself up for sale in the fall. The company’s suitors included Paramount, Skydance, and Comcast, which each made bids in a largely secretive process. (Comcast owns NBCUniversal, the parent company of NBC News.)

The tie-up would not include Warner-owned cable channels like CNN and TNT.

Paramount was widely seen as the frontrunner in the bidding war because of the company’s deep pockets and political ties. David Ellison is the son of Larry Ellison, the Silicon Valley magnate and friend of President Donald Trump.

The corporate union between Warner Bros. and Netflix still faces potential antitrust scrutiny and political challenges.

In late November, three senators — Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont and Richard Blumenthal of Connecticut — sent a letter to the Justice Department Antitrust Division warning that any potential Warner Bros. merger could be tainted by “political favoritism and corruption.”

Rep. Darrell Issa, R-Calif., sent a letter to Attorney General Pam Bondi the same month, cautioning that merging Netflix with HBO Max would create a company with a more than “30 percent share of the streaming market: a threshold traditionally viewed as presumptively problematic under antitrust law.”

In early December, an anonymous group of “concerned feature film producers” reportedly sent a letter to Congress urging them to go publicly against Netflix’s bid and give the potential deal “the highest level of antitrust scrutiny,” according to Variety.

The deal could also draw attention from state regulators.

In a statement, a spokesperson for the California attorney general’s office said: “The Department of Justice believes further consolidation in markets that are central to American economic life — whether in the financial, airline, grocery, or broadcasting and entertainment markets — does not serve the American economy, consumers, or competition well.”

“We are committed to protecting consumers and California’s economy from consolidation we find unlawful,” the spokesperson added.

Warner Bros. has fallen under various corporate owners since it was founded in 1923, and the company’s recent history is especially complex. It was acquired by AT&T for $85 billion in 2016. AT&T then spun off the Warner Bros. assets, which were merged with Discovery in 2022.