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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 direct TV networks

(New throughout, adds information, background, remarks from industry experts and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable TV companies such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV organization as more cable customers cut the cable.

Shares of Warner jumped after the business said the brand-new structure would be more deal friendly and it anticipated 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 TV companies, a longtime money cow where profits are wearing down as countless consumers accept streaming video.

Comcast last month revealed plans to split most of its NBCUniversal cable television networks into a brand-new public company. The brand-new company would be well capitalized and placed to get other cable television networks if the market consolidates, one source informed Reuters.

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

"We highly believe there is potential for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, using the industry term for conventional tv.

"Further, our company believe WBD's standalone streaming and studio properties would be an attractive takeover target."

Under the new structure for Warner Bros Discovery, the cable television TV service 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 different department along with movie studios, consisting of Warner Bros Pictures and New Line Cinema.
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The restructuring reflects an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

"Streaming won as a habits," stated Jonathan Miller, chief executive of digital media investment firm Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will separate growing studio and streaming properties from rewarding however shrinking cable company, giving a clearer investment photo and likely setting the stage for a sale or spin-off of the cable system.

The media veteran and consultant forecasted Paramount and others might 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 positioning the company for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if additional combination will take place-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

Zaslav signaled that situation throughout Warner Bros Discovery's investor call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry debt consolidation.

Zaslav had participated in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulative filing last month.

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

"The structure modification would make it easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, describing the cable business. "However, discovering a buyer will be difficult. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery documented the value of its TV possessions by over $9 billion due to unpredictability around costs from cable television and satellite suppliers and sports betting rights renewals.

This week, the media business announced a multi-year offer increasing the overall charges Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with an offer reached this year with cable television and broadband company Charter, will be a template for future settlements with distributors. That might assist 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, and David Gregorio)
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