Shares dive 13% after restructuring statement

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

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Challenges seen in selling debt-laden linear TV networks

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

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business said the 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 companies, a long time cash cow where earnings are wearing down as millions of consumers embrace streaming video.

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

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

"We strongly believe there is capacity for fairly sizable synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for traditional tv.

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

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

Streaming platforms Max and Discovery+ will be under a different department 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 paying off.

"Streaming won as a behavior," stated 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 brand-new business structure will differentiate growing studio and streaming possessions from rewarding however shrinking cable television TV business, offering a clearer investment image and most likely setting the phase for a sale or spin-off of the cable system.

The media veteran and adviser anticipated 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 getting the even bigger 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 around or knocked off the board, or if additional combination will occur-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav indicated that circumstance 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, opening the door to media market debt consolidation.

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

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

"The structure change would make it easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable TV business. "However, finding a purchaser will be difficult. The networks are in financial obligation and have no signs of development."

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

Today, the media business revealed a multi-year deal increasing the total costs Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with a deal reached this year with cable television and broadband company Charter, will be a design template for future settlements with distributors. That might help stabilize 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)