Shares dive 13% after restructuring announcement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds 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 chose to separate its decreasing cable services 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 leapt after the business said the brand-new structure would be more deal friendly and it expected to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are considering choices for fading cable organizations, a long time golden goose where revenues are deteriorating as countless customers accept streaming video.

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

Bank of America research study analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service possessions are a "extremely sensible partner" for Comcast's brand-new spin-off business.

"We highly think there is potential for fairly sizable synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for traditional television.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV organization including 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 division along with film studios, including 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 paying off.

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new business structure will distinguish growing studio and streaming assets from rewarding but diminishing cable company, offering a clearer investment image and most likely setting the phase for a sale or spin-off of the cable system.

The media veteran and consultant anticipated 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 acquiring the even larger target, AT&T's WarnerMedia, is placing the business for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

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

Zaslav signified that circumstance 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, opening the door to media industry combination.

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

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

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

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

Today, the media company announced a multi-year deal 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 a deal reached this year with cable television and broadband company Charter, will be a design template for future negotiations with suppliers. That might assist stabilize pricing 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)