Shares jump 13% after reorganizing 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, adds details, background, remarks from market experts and experts, 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 companies such as CNN from streaming and studio operations such as Max, laying the foundation for a potential sale or spinoff of its TV company as more cable subscribers cut the cord.

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

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

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

"We highly think there is potential for fairly large synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV company 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 in addition to film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will separate growing studio and streaming properties from rewarding however shrinking cable TV service, giving a clearer financial investment image and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and advisor predicted Paramount and others might 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 bigger target, AT&T's WarnerMedia, is placing the company for its next chess move, composed MoffettNathanson analyst Robert Fishman.

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

Zaslav indicated that scenario 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 combination.

Zaslav had actually taken part in merger talks with Paramount late last year, though an offer 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 financial obligation.

"The structure change would make it much easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes said, referring to the cable service. "However, discovering a buyer will be challenging. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery composed down the worth of its TV assets by over $9 billion due to unpredictability around charges from cable television and satellite distributors and sports betting rights renewals.

This week, the media company revealed 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 an offer reached this year with cable and broadband supplier Charter, will be a design template for future negotiations with distributors. 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)