Shares jump 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes information, background, remarks from industry insiders and analysts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable television organizations such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV service as more cable subscribers cut the cable.

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 companies are thinking about alternatives for fading cable services, a long time golden goose where earnings are wearing down as millions of customers accept streaming video.

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

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

"We strongly believe there is potential for fairly substantial synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, using the market term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable business 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 different division together with 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 paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming properties from rewarding but diminishing cable television service, offering a clearer financial investment picture 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 acquiring the even bigger target, AT&T's WarnerMedia, is positioning the company for its next chess move, wrote MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be walked around 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," composed Fishman.

Zaslav signified that scenario throughout Warner Bros Discovery's investor call last month. He stated he prepared for 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 financial obligation.

"The structure modification would make it much easier for WBD to offer off its direct TV networks," eMarketer expert Ross Benes stated, describing the cable television company. "However, finding a purchaser will be difficult. 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 unpredictability around charges from cable television and satellite distributors and sports betting rights renewals.

Today, the media company revealed a multi-year offer increasing the general fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with an offer reached this year with cable television and broadband provider Charter, will be a design template for future settlements with suppliers. That could help support 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)