Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, remarks from market insiders and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business said the brand-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 companies are considering alternatives for fading cable television TV businesses, a long time cash cow where profits are deteriorating as countless consumers welcome streaming video.

Comcast last month revealed plans to split most of its NBCUniversal cable networks into a new public business. The brand-new company would be well capitalized and placed to obtain other cable 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 possessions are a "extremely sensible partner" for Comcast's new spin-off business.

"We highly think there is potential for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable television TV service 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 department together with movie studios, including 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 finally paying off.

"Streaming won as a habits," said Jonathan Miller, chief executive of digital media financial investment business Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming assets from successful however diminishing cable television TV organization, providing a clearer financial investment photo and 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 comparable path.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before acquiring the even larger target, AT&T's WarnerMedia, is positioning the business for its next chess move, composed MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if more combination will take place-- it is a matter of who is the purchaser and who is the seller," composed Fishman.

Zaslav indicated that scenario throughout Warner Bros Discovery's investor call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry debt consolidation.

Zaslav had actually taken part in merger talks with Paramount late last year, though an offer never materialized, according to a regulative filing last month.

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

"The structure modification would make it much easier for WBD to sell its direct TV networks," eMarketer expert Ross Benes stated, describing the cable TV business. "However, discovering a buyer will be difficult. The networks owe money and have no signs of development."

In August, Warner Bros Discovery documented the value of its TV possessions by over $9 billion due to unpredictability around charges from cable and satellite suppliers and sports betting rights renewals.

This week, the media business revealed a multi-year deal increasing the overall costs Comcast will pay to disperse Warner Bros Discovery's networks.

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