Netflix has agreed to buy the film and streaming businesses of Warner Bros Discovery for $72bn (£54bn) in a major Hollywood deal.

The streaming giant emerged as the successful bidder for Warner Bros ahead of rivals Comcast and Paramount Skydance after a drawn-out battle.

Warner Bros owns franchises including Harry Potter and Game of Thrones, and the streaming service HBO Max.

The takeover is set to create a new giant in the entertainment industry, but the deal will still have to be approved by competition authorities.

Some in the film industry, including the Writers Guild of America, have criticised the deal, saying it would negatively impact workers and consumers.

Netflix co-chief executive Ted Sarandos said the streamer was “highly confident” it would receive the regulatory approval it needs and it was running “full speed” towards this.

He said that by combining the library of Warner Bros shows and movies with the streaming platform’s series such as Stranger Things, “we can give audiences more of what they love and help define the next century of storytelling”.

“Warner Bros have defined the last century of entertainment, and together we can define the next one,” he said.

Asked whether HBO should remain a separate streaming service, co-chief executive Greg Peters said Netflix believed the HBO brand was important for consumers, but added: “We think it’s quite early to get into the specifics of how we’re going to tailor this offering for consumers.”

Netflix estimates it will find $2bn to $3bn in savings, mostly through eliminating overlaps in the support and technology areas of the businesses.

Films made by Warner Bros will continue to be launched in cinemas, it said, and Warner Bros television studio will continue to be able to produce for third parties. Netflix will keep producing content exclusively for its own platform.

Labelling it a “big day” for the companies, Mr Sarandos acknowledged the acquisition may have surprised some shareholders but it was a “rare opportunity” to set Netflix up for success “for decades to come”.

David Zaslav, president and chief executive of Warner Bros, added the agreement would combine “two of the greatest storytelling companies in the world”.

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

The cash and stock deal is worth $27.75 per Warner Bros share, with a total enterprise value – which includes the company’s debts and the value of its shares – of about $82.7bn. The equity value, or cash price, is $72bn.

The boards of directors from each company unanimously approved the deal.

Some in the film industry have criticised the agreement.

The Writers Guild of America’s East and West branches issued a joint statement on Friday saying “this merger must be blocked”.

“The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers,” it said.

Michael O’Leary, chief executive of trade organisation Cinema United, said the merger posed “an unprecedented threat” to the global cinema business.

“The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world,” he said.

Netflix will complete the takeover after Warner Bros finalises its previously announced plans to separate its streaming and studios division from its global networks division into two companies next year.

Its global networks division will become Discovery Global and will include its cable channels such as CNN and TNT Sports in the US, as well as its Discovery and free-to-air channels in Europe.

However, TNT Sports International will stay with the streaming and studios division being sold to Netflix.

Paolo Pescatore, founder and technology media and telecom analyst at PP Foresight, said the sale was “a huge statement of intent and underlines Netflix aspirations to be a global leader in the new world order of streaming”.

But he warned that while the “surprising move” made sense for Warner Bros, it could “provide a headache for Netflix” when trying to combine the companies given the size of the deal.

While the agreed deal is for part of the Warner Bros business, rival Paramount had tabled a bid to buy the whole company, including its cable networks, in October.

Warner Bros rejected this move before putting itself up for sale.

Ahead of the announcement of the deal, Tom Harrington, head of television at Enders Analysis, said it was hard to gauge whether the takeover would be approved by regulators, but if it went through it would have a massive impact on cinema.

“Were it to go through it would reorient Hollywood,” he said.

Mr Harrington said there was likely to be “big reductions” in television and film output from a newly-merged company, which would lead to resistance to the move from parts of Hollywood and relevant unions.

For consumers, Mr Harrington said a merger was likely to lead to higher prices.

“Netflix would get more expensive and even though HBO Max would be shuttered/become non-essential, the greater penetration of Netflix households would likely mean an increase in total overall subscription revenues.”

Danni Hewson, head of financial analysis at AJ Bell, said Netflix had “offered an olive branch” to Hollywood with the promise it would continue to release Warner Bros films on the big screen.

“If this deal can clear those significant regulatory hurdles quickly there are likely to be considerable cost savings to be made,” she said.

“How much of those savings get passed to streaming platform subscribers or whether Netflix will be seen to have too much pricing power is one of the areas that will face a huge amount of scrutiny in the coming months.”

With additional reporting by Natalie Sherman