Shares dive 13% after restructuring announcement

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, remarks 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 decided to separate its decreasing cable television businesses 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 television subscribers cut the cable.

Shares of Warner jumped after the company said 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 business are thinking about options for fading cable TV organizations, a longtime cash cow where revenues are wearing down as millions of consumers accept streaming video.

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

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

"We highly think there is capacity for relatively sizable synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the market term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable TV 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 different department along with film studios, including 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 behavior," said Jonathan Miller, primary executive of digital media investment business Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming assets from lucrative but shrinking cable television service, giving a clearer investment photo and likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and consultant forecasted Paramount and others might take a similar path.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before obtaining the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be walked around or knocked off the board, or if further consolidation will take place-- it is a matter of who is the purchaser and who is the seller," composed Fishman.

Zaslav signified that scenario during 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, unlocking to media industry combination.

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

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

"The structure modification would make it easier for WBD to sell its direct TV networks," eMarketer expert Ross Benes said, referring to the cable television service. "However, finding a buyer will be difficult. The networks are in debt and have no indications of development."

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

Today, the media business announced a multi-year offer increasing the general charges Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast arrangement, together with a deal reached this year with cable television and broadband supplier Charter, will be a template for future settlements with suppliers. That could help 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)