Shares dive 13% after restructuring statement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, includes details, 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 decided to separate its decreasing cable businesses such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV service as more cable customers cut the cord.

Shares of Warner jumped after the company said the brand-new structure would be more deal friendly and it expected to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are thinking about choices for fading cable businesses, a long time cash cow where profits are deteriorating as countless consumers embrace streaming video.

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

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

"We highly think there is capacity for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional tv.

"Further, our company 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 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 along with movie studios, consisting of 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 finally settling.

"Streaming won as a habits," stated Jonathan Miller, president 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 possessions from lucrative however shrinking cable TV business, offering a clearer investment photo and most likely setting the phase for a sale or spin-off of the cable system.

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

"The question is not whether more pieces will be moved around or knocked off the board, or if more debt consolidation will occur-- it refers who is the buyer and who is the seller," composed Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He stated he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking 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 caution, noting Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure modification would make it simpler for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable television company. "However, discovering a buyer will be challenging. The networks owe money and have no indications of growth."

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

This week, the media business revealed a multi-year offer increasing the total charges Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with a deal reached this year with cable and broadband service provider Charter, will be a template for future negotiations with distributors. That could help stabilize 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)