Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes information, background, comments from market experts and analysts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable organizations such as CNN from streaming and studio operations such as Max, laying the foundation for a possible sale or spinoff of its TV service as more cable television customers cut the cable.

Shares of Warner jumped 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 considering choices for fading cable TV businesses, a longtime golden goose where incomes are wearing down as millions of consumers embrace streaming video.

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

Bank of America research study analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service assets are a "extremely logical partner" for Comcast's new spin-off business.

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

"Further, we think 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 an unit called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate department along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are finally settling.

"Streaming won as a habits," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from lucrative however shrinking cable television organization, providing a clearer financial investment image and most likely setting the stage for a sale or spin-off of the cable 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 acquiring the even bigger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

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

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

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

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

"The structure modification would make it much easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, describing the cable television TV service. "However, discovering a purchaser will be difficult. The networks are in financial obligation and have no signs of growth."

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

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

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