Shares dive 13% after restructuring announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes details, background, comments from market insiders 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 declining cable television services such as CNN from streaming and studio operations such as Max, laying the groundwork for a potential sale or spinoff of its TV company as more cable subscribers cut the cord.

Shares of Warner leapt after the company stated the brand-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%.

Media business are thinking about alternatives for fading cable television TV services, a longtime golden goose where incomes are wearing down as countless consumers welcome streaming video.

Comcast last month revealed strategies to divide many of its NBCUniversal cable television networks into a brand-new public company. The new business would be well capitalized and positioned to get other cable networks if the industry combines, 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 capacity for relatively sizable synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the industry term for conventional 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 TV company 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 separate division along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows 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," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will distinguish growing studio and streaming properties from successful however shrinking cable television company, providing a clearer financial investment image and most likely setting the stage for a sale or spin-off of the cable television system.

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

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

Zaslav signaled 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, unlocking to media market consolidation.

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

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

"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes stated, describing the cable TV organization. "However, discovering a buyer will be tough. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery jotted down the worth of its TV properties by over $9 billion due to uncertainty around fees from cable and satellite distributors and sports betting rights renewals.

Today, the media business announced a multi-year offer increasing the total charges Comcast will pay to disperse Warner Bros Discovery's networks.

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