Shares jump 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds details, background, remarks from market insiders and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the company stated the brand-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 thinking about alternatives for fading cable television organizations, a longtime cash cow where incomes are eroding as countless customers accept streaming video.

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

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

"We strongly believe there is potential for relatively sizable synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for standard tv.

"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 TV business 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 together with movie studios, consisting of Warner Bros Pictures and New Line Cinema.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming possessions from successful however diminishing cable company, offering a clearer financial investment photo and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and advisor anticipated Paramount and others may 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 bigger target, AT&T's WarnerMedia, is placing the business for its next chess move, composed 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 occur-- it refers who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that scenario throughout Warner Bros Discovery's financier call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market consolidation.

Zaslav had engaged in merger talks with Paramount late last year, though an offer never ever materialized, according to a regulative filing last month.

Others injected a note of caution, noting Warner Bros Discovery brings $40.4 billion in debt.

"The structure modification would make it simpler for WBD to sell off its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable service. "However, discovering a purchaser will be challenging. The networks are in financial obligation and have no signs of growth."

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

This week, the media business revealed a multi-year deal increasing the total fees Comcast will pay to distribute Warner Bros Discovery's networks.

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