Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds details, background, remarks from market experts and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business stated the new structure would be more deal friendly and it anticipated to complete 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 organizations, a longtime cash cow where profits are wearing down as countless customers welcome streaming video.

Comcast last month revealed strategies to divide most of its NBCUniversal cable television networks into a new public company. The brand-new business would be well capitalized and positioned to obtain other cable television 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 television assets are a "really rational partner" for Comcast's brand-new spin-off business.

"We highly believe there is capacity for relatively large synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for conventional 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 service 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 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 habits," stated Jonathan Miller, chief executive of digital media investment business Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming properties from profitable but shrinking cable organization, offering a clearer investment photo and most likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and adviser predicted Paramount and others may take a similar course.

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 company for its next chess move, composed MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if further combination will occur-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav indicated that situation during 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 market debt consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though an offer never ever emerged, according to a regulatory filing last month.

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

"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes stated, describing the cable organization. "However, discovering a buyer will be challenging. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery documented the worth 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 company announced a multi-year offer increasing the general fees 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 television and broadband provider Charter, will be a template for future settlements with distributors. That might assist support 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)