Shares jump 13% after restructuring 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 information, background, remarks from market experts and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its decreasing cable television TV businesses 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 cable.

Shares of Warner jumped after the business stated the brand-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 companies, a long time golden goose where profits are wearing down as millions of consumers welcome streaming video.

Comcast last month unveiled strategies to divide most of its NBCUniversal cable television networks into a brand-new public company. The new business would be well capitalized and positioned to acquire other cable television networks if the market consolidates, one source informed Reuters.

Bank of America research 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 highly think there is capacity for relatively large synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the market term for standard tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable television service consisting of TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a different department in addition to film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

"Streaming won as a behavior," said Jonathan Miller, chief executive of digital media financial investment business 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 assets from profitable however shrinking cable organization, offering a clearer financial investment picture and likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and advisor 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 acquiring the even larger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, wrote MoffettNathanson analyst Robert Fishman.

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

Zaslav signaled that circumstance throughout 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, unlocking to media industry consolidation.

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

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

"The structure change would make it easier for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television TV organization. "However, finding a buyer will be difficult. The networks are in financial obligation and have no signs of development."

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

Today, the media company announced a multi-year offer increasing the general costs Comcast will pay to disperse 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 supplier Charter, will be a design template for future settlements with distributors. That might assist 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)