Shares jump 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 details, background, remarks from market insiders and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped after the company stated 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 companies are considering choices for fading cable television TV companies, a long time golden goose where profits are eroding as countless consumers welcome streaming video.

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

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

"We strongly believe there is capacity for relatively large synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, using the market term for standard television.

"Further, we believe WBD's standalone streaming and studio possessions would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television 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 film 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 finally paying off.

"Streaming won as a behavior," stated Jonathan Miller, chief executive of digital media financial investment company Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will differentiate growing studio and streaming properties from profitable however diminishing cable television TV service, providing a clearer financial investment picture and likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser predicted Paramount and others may take a comparable 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 positioning the company for its next chess move, composed MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be walked around or knocked off the board, or if more debt consolidation will happen-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav indicated that circumstance throughout Warner Bros Discovery's investor call last month. He stated he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry debt consolidation.

Zaslav had actually taken part in merger talks with Paramount late last year, though a deal never 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 change would make it much easier for WBD to offer off its direct TV networks," eMarketer expert Ross Benes said, describing the cable business. "However, discovering a purchaser will be challenging. The networks are in debt and have no signs of growth."

In August, Warner Bros Discovery made a note of the worth of its TV assets by over $9 billion due to uncertainty around fees from cable television and satellite suppliers and sports betting rights renewals.

This week, the media business announced a multi-year deal increasing the overall charges Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast arrangement, together with a deal reached this year with cable television and broadband supplier Charter, will be a template for future settlements with suppliers. That could help support 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)