Shares dive 13% after reorganizing statement

Follows course taken by Comcast's brand-new spin-off business

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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 costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable television organizations 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 television subscribers cut the cable.

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

Media business are thinking about alternatives for fading cable television businesses, a longtime cash cow where incomes are wearing down as millions of consumers accept streaming video.

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

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable tv possessions are a "very logical partner" for Comcast's brand-new spin-off business.

"We highly think there is capacity for fairly substantial synergies if WBD's direct networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for standard television.

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

Under the brand-new structure for Warner Bros Discovery, the cable company 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 different division along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring reflects 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 investment company Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming possessions from lucrative however diminishing cable company, giving a clearer financial investment image and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and consultant forecasted Paramount and others may take a similar 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 positioning the business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav signaled that scenario throughout 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, opening the door to media industry debt consolidation.

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

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

"The structure modification would make it easier for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable organization. "However, discovering a buyer will be difficult. The networks owe money and have no indications of development."

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

This week, the media company announced a multi-year deal increasing the total charges Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable and broadband service provider Charter, will be a template for future negotiations with distributors. That might help support 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)