Shares dive 13% after restructuring announcement

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

*

Challenges seen in selling debt-laden linear TV networks

(New throughout, includes information, background, comments from market insiders and analysts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the company stated the 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 thinking about alternatives for fading cable television TV services, a long time golden goose where incomes are deteriorating as millions of consumers welcome streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable networks into a new public business. The new business would be well capitalized and placed to get other cable networks if the market combines, one source told Reuters.

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable tv properties are a "very logical partner" for Comcast's brand-new spin-off company.

"We highly believe there is capacity for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the industry term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV organization 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 different division together with film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming possessions from profitable but diminishing cable television service, offering a clearer investment image and most likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and consultant anticipated 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 positioning the business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

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

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

Zaslav had actually taken part in merger talks with Paramount late last year, though an offer never 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 change would make it simpler for WBD to sell its direct TV networks," eMarketer expert Ross Benes said, describing the cable TV business. "However, finding a buyer will be tough. The networks are in financial obligation and have no indications of development."

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

This week, the media company announced a multi-year deal increasing the total charges Comcast will pay to distribute 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 service provider Charter, will be a design template for future settlements with suppliers. That could help support pricing 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)