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Shares dive 13% after restructuring statement
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Follows course taken by Comcast's brand-new spin-off company
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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds information, background, comments from market experts and experts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

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

Media business are considering alternatives for fading cable services, a longtime golden goose where earnings are deteriorating as countless consumers welcome streaming video.

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

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service properties are a "very sensible partner" for Comcast's new spin-off business.

"We strongly 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 conventional tv.

"Further, we think 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 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 separate division together with film studios, including Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new business structure will separate growing studio and streaming assets from successful but shrinking cable television company, giving a clearer investment picture and most likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and adviser predicted Paramount and others might 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 company for its next chess relocation, wrote MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be walked around or knocked off the board, or if additional debt consolidation will happen-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

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

Zaslav had actually taken part in merger talks with Paramount late in 2015, though an offer never ever emerged, according to a regulatory filing last month.

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

"The structure change would make it much easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes said, describing the cable service. "However, finding a purchaser will be tough. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery jotted down the worth of its TV possessions by over $9 billion due to uncertainty around fees from cable and satellite distributors and sports betting rights renewals.
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Today, the media company announced a multi-year offer increasing the general charges Comcast will pay to disperse Warner Bros Discovery's networks.

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