Shares dive 13% after reorganizing announcement

Follows path taken by Comcast's new spin-off business

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds information, background, comments from industry experts and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business said 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 options for fading cable organizations, a longtime golden goose where earnings are deteriorating as countless customers welcome streaming video.

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

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

"We highly believe there is potential for fairly sizable synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional television.

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

Under the brand-new structure for Warner Bros Discovery, the cable television business consisting of 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 division in addition to movie 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 lastly settling.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will distinguish growing studio and streaming properties from rewarding but diminishing cable service, providing a clearer financial investment picture and likely setting the phase for a sale or spin-off of the cable system.

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

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

"The concern is not whether more pieces will be walked around or knocked off the board, or if further consolidation will take place-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that scenario during 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 emerged, according to a regulatory filing last month.

Others injected a note of care, keeping in mind Warner Bros Discovery brings $40.4 billion in debt.

"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes stated, referring to the cable organization. "However, discovering a buyer will be challenging. The networks owe money and have no indications of development."

In August, Warner Bros Discovery made a note of the worth of its TV properties by over $9 billion due to unpredictability around charges from cable and satellite distributors and sports betting rights renewals.

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

Warner Bros Discovery is wagering the Comcast arrangement, together with an offer reached this year with cable television and broadband supplier Charter, will be a design template for future settlements with suppliers. That could help 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)