Shares dive 13% after reorganizing announcement

Follows course taken by Comcast's new spin-off company

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes details, background, remarks from market insiders and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

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

Media companies are considering options for fading cable television TV companies, a longtime money cow where revenues are eroding as millions of consumers welcome streaming video.

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

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

"We highly believe there is potential for relatively substantial synergies if WBD's direct networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard television.

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

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

The restructuring shows 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, president of digital media financial investment company Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from successful however shrinking cable television company, giving a clearer financial investment photo and 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 acquiring the even bigger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

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

Zaslav signaled that situation during Warner Bros Discovery's financier call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry debt consolidation.

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

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

"The structure change would make it simpler for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes said, referring to the cable TV organization. "However, finding a purchaser will be difficult. The networks are in financial obligation and have no indications of growth."

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

Today, the media company announced a multi-year deal increasing the overall charges Comcast will pay to disperse 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 service provider Charter, will be a template for future settlements with suppliers. That could assist stabilize 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)