Shares jump 13% after reorganizing announcement

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

*

Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, comments from industry 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 decreasing cable television TV companies such as CNN from streaming and studio operations such as Max, preparing for a possible sale or spinoff of its TV company as more cable customers cut the cable.

Shares of Warner leapt after the company stated the brand-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 thinking about alternatives for fading cable television services, a longtime money cow where incomes are deteriorating as millions of consumers welcome streaming video.

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

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

"We strongly believe there is potential for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the industry term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable service 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 separate division together with movie studios, consisting of Warner Bros Pictures and New Line Cinema.

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

"Streaming won as a behavior," stated Jonathan Miller, chief executive of digital media investment firm Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming assets from successful however shrinking cable business, giving a clearer financial investment picture and likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and consultant predicted Paramount and others may take a comparable path.

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, composed MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if additional consolidation will happen-- it is a matter of who is the buyer and who is the seller," composed Fishman.

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

Zaslav had taken part in merger talks with Paramount late last year, though a deal never ever materialized, according to a regulatory filing last month.

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

"The structure change would make it much easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, describing the cable service. "However, discovering a buyer will be challenging. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery documented the worth of its TV assets 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 general charges 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 supplier Charter, will be a template for future negotiations with suppliers. That might assist 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)