Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, includes information, background, comments 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 chose to separate its declining cable television companies 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 jumped after the company said the new structure would be more deal friendly and it anticipated to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are considering options for fading cable television TV services, a longtime cash cow where revenues are wearing down as millions of consumers embrace streaming video.

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

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service possessions are a "really logical partner" for Comcast's new spin-off company.

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

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

Under the 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 different department together with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media industry, as financial 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 investment firm Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming properties from successful however shrinking cable television business, providing a clearer financial investment picture and likely setting the stage for a sale or spin-off of the cable system.

The media veteran and adviser anticipated Paramount and others might take a comparable path.

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

"The concern is not whether more pieces will be walked around or knocked off the board, or if additional combination will occur-- it refers who is the buyer and who is the seller," composed Fishman.

Zaslav signified that scenario throughout 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 industry consolidation.

Zaslav had engaged in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulative filing last month.

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

"The structure change would make it easier for WBD to sell its direct TV networks," eMarketer expert Ross Benes said, referring to the cable television service. "However, discovering a purchaser will be challenging. The networks are in debt and have no signs of development."

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

Today, the media company revealed a multi-year deal increasing the general charges Comcast will pay to disperse 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 could help stabilize rates 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)