Shares dive 13% after reorganizing statement

Follows path taken by Comcast's brand-new spin-off business
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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds details, background, remarks from market experts and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

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

Media business are considering choices for fading cable organizations, a long time golden goose where incomes are wearing down as countless consumers accept streaming video.

Comcast last month revealed strategies to split the majority of its NBCUniversal cable networks into a new public company. The new business would be well capitalized and placed to obtain other cable networks if the market consolidates, one source informed Reuters.

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable possessions are a "really sensible partner" for Comcast's new spin-off business.

"We strongly think there is potential for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable company including TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate division together with movie studios, consisting of Warner Bros 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 lastly paying off.

"Streaming won as a habits," stated Jonathan Miller, primary executive of digital media investment company Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming possessions from lucrative but shrinking cable TV business, offering a clearer financial investment photo and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and advisor predicted Paramount and others may take a comparable path.

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

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

Zaslav indicated that circumstance throughout Warner Bros Discovery's financier call last month. He said he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market combination.

Zaslav had actually taken part in merger talks with Paramount late in 2015, though a deal never ever materialized, according to a regulative filing last month.

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

"The structure modification would make it simpler for WBD to sell off its linear TV networks," eMarketer expert Ross Benes said, describing the cable television TV company. "However, finding a buyer will be tough. The networks owe money and have no indications of development."
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In August, Warner Bros Discovery jotted down the value of its TV assets by over $9 billion due to unpredictability around charges from cable and satellite distributors and sports betting rights renewals.
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Today, the media company announced a multi-year offer increasing the overall fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast arrangement, together with a deal reached this year with cable and broadband service provider Charter, will be a template for future settlements with suppliers. That could help support prices 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)