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Shares dive 13% after restructuring statement

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

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Challenges seen in selling debt-laden linear TV networks
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(New throughout, includes information, background, remarks from market experts and analysts, updates share prices)
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By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining 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 business as more cable subscribers cut the cord.

Shares of Warner jumped after the business stated the new structure would be more deal friendly and it anticipated to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are considering options for fading cable television TV businesses, a longtime golden goose where revenues are wearing down as millions of customers embrace streaming video.
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Comcast last month revealed strategies to divide the majority of its NBCUniversal cable television networks into a brand-new public company. The brand-new company would be well capitalized and positioned to obtain other cable television networks if the industry consolidates, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service properties are a "really rational partner" for Comcast's brand-new spin-off business.

"We strongly think there is capacity for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for traditional television.

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

Under the brand-new structure for Warner Bros Discovery, the cable television TV organization including 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 division along with film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

"Streaming won as a habits," said Jonathan Miller, president of investment firm Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming possessions from profitable but diminishing cable television service, offering a clearer financial investment picture and most likely setting the phase 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 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 buyer and who is the seller," wrote Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's financier call last month. He stated he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry debt consolidation.
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Zaslav had participated in merger talks with Paramount late in 2015, though an offer never emerged, according to a regulatory filing last month.

Others injected a note of care, noting Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television organization. "However, discovering a purchaser will be difficult. The networks are in debt and have no indications of growth."

In August, Warner Bros Discovery wrote down the value of its TV possessions by over $9 billion due to uncertainty around fees from cable and satellite suppliers and sports betting rights renewals.
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Today, the media company announced a multi-year deal increasing the overall fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with a deal reached this year with cable and broadband supplier Charter, will be a design template for future settlements 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)