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

(New throughout, adds details, background, remarks 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 decreasing cable TV companies such as CNN from streaming and studio operations such as Max, laying the groundwork for a potential sale or spinoff of its TV service as more cable television subscribers cut the cable.

Shares of Warner jumped after the company said 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 companies are thinking about options for fading cable television TV services, a longtime cash cow where earnings are deteriorating as millions of consumers welcome streaming video.

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

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

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

"Further, we 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 television organization consisting of 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 along with film 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 settling.

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

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

The media veteran and adviser anticipated Paramount and others might take a similar course.

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 placing the business for its next chess relocation, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if further combination will take place-- it refers who is the buyer and who is the seller," wrote Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market consolidation.

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

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

"The structure modification would make it much easier for WBD to sell off its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable organization. "However, finding a buyer will be tough. The networks owe money 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 costs from cable television and satellite suppliers and sports betting rights renewals.

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

Warner Bros Discovery is sports betting the Comcast agreement, together with a deal reached this year with cable television and broadband service provider Charter, will be a template for future negotiations 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)
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