Shares dive 13% after reorganizing statement

Follows path taken by Comcast's new spin-off business

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Challenges seen in offering debt-laden linear TV networks

(New throughout, includes information, background, remarks from market insiders 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 TV services such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV business as more cable television subscribers cut the cord.

Shares of Warner leapt after the company stated the 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 considering choices for fading cable television companies, a longtime money cow where incomes are deteriorating as millions of customers accept streaming video.

Comcast last month revealed plans to divide many of its NBCUniversal cable networks into a brand-new public company. The new business would be well capitalized and positioned to get other cable networks if the market combines, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable tv properties are a "extremely rational partner" for Comcast's brand-new spin-off business.

"We highly think there is potential for fairly large synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the industry term for traditional television.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV business 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 along 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 settling.

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment firm 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 properties from profitable however diminishing cable business, providing a clearer financial investment photo 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 comparable course.

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 positioning the company for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav signified that scenario during Warner Bros Discovery's investor call last month. He said he anticipated 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 in 2015, though an offer never ever emerged, 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 easier for WBD to offer off its direct TV networks," eMarketer expert Ross Benes stated, referring to the cable television TV business. "However, finding a purchaser 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 charges from cable and satellite distributors and sports betting rights renewals.

This week, the media company revealed a multi-year offer increasing the general fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with a deal reached this year with cable and broadband company Charter, will be a design template for future negotiations with distributors. 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)

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