Shares dive 13% after reorganizing statement

Follows course taken by Comcast's brand-new spin-off business

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, remarks from industry insiders and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining cable television organizations such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV service as more cable television subscribers cut the cable.

Shares of Warner leapt after the business stated the brand-new structure would be more deal friendly and it anticipated to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are thinking about choices for fading cable television companies, a long time money cow where revenues are wearing down as countless customers welcome streaming video.

Comcast last month revealed strategies to divide the majority of its NBCUniversal cable television networks into a brand-new public company. The brand-new company would be well capitalized and positioned to acquire other cable networks if the market consolidates, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service assets are a "very logical partner" for Comcast's new spin-off business.

"We strongly believe there is capacity for relatively large synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, using the market term for conventional television.

"Further, we believe WBD's standalone streaming and studio assets would be an attractive takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television company consisting of TNT, Animal Planet and CNN will be housed in an unit called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate department along with film studios, consisting of Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media market, as financial investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new corporate structure will differentiate growing studio and streaming properties from lucrative but diminishing cable television TV service, offering a clearer financial investment image and likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser predicted Paramount and others may take a similar path.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before acquiring the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if additional debt consolidation will happen-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that circumstance during Warner Bros Discovery's investor call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

Zaslav had actually engaged in merger talks with Paramount late in 2015, though an offer never ever emerged, according to a regulatory filing last month.

Others injected a note of care, noting Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure modification would make it much easier for WBD to sell off its linear TV networks," eMarketer expert Ross Benes stated, describing the cable television business. "However, discovering a purchaser will be tough. The networks are in debt and have no signs of development."

In August, Warner Bros Discovery documented the worth of its TV properties by over $9 billion due to uncertainty around fees from cable and satellite distributors and sports betting rights renewals.

Today, the media business announced a multi-year deal increasing the overall charges Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with a deal reached this year with cable and broadband company Charter, will be a template for future settlements with distributors. That might assist support rates for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles; Editing by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)