Shares dive 13% after reorganizing statement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds information, 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 chose to separate its decreasing cable television TV organizations such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV service as more cable customers cut the cord.

Shares of Warner leapt after the business said 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%.
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Media business are considering choices for fading cable television services, a longtime cash cow where earnings are deteriorating as millions of customers welcome streaming video.

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

Bank of America research expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television assets are a "extremely sensible partner" for Comcast's new spin-off company.

"We highly think there is capacity for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable television service 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 different department along with movie studios, including Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming possessions from successful however diminishing cable service, providing a clearer financial investment image and likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and advisor anticipated Paramount and others might take a comparable course.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before obtaining the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if further combination will occur-- it is a matter of who is the purchaser and who is the seller," composed Fishman.
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Zaslav signified that scenario 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, unlocking to media industry debt consolidation.

Zaslav had actually engaged in merger talks with Paramount late in 2015, though an offer never ever materialized, according to a regulative filing last month.
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Others injected a note of caution, keeping in mind Warner Bros Discovery brings $40.4 billion in financial obligation.
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"The structure modification would make it simpler for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes said, referring to the cable television company. "However, discovering a buyer will be difficult. The networks are in debt and have no indications of growth."
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In August, Warner Bros Discovery composed down the worth of its TV possessions by over $9 billion due to unpredictability around fees from cable and satellite distributors and sports betting rights renewals.
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This week, the revealed a multi-year deal increasing the total costs Comcast will pay to disperse Warner Bros Discovery's networks.

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