Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, includes details, background, remarks from industry experts and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its decreasing cable television businesses such as CNN from streaming and studio operations such as Max, laying the foundation for a possible sale or spinoff of its TV business as more cable television customers cut the cord.

Shares of Warner leapt after the business said the 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 business are thinking about choices for fading cable television organizations, a long time cash cow where incomes are wearing down as millions of consumers embrace streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable television networks into a brand-new public business. The brand-new business 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 expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable tv properties are a "very rational partner" for Comcast's new spin-off business.

"We strongly believe there is capacity for relatively substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, utilizing 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 brand-new structure for Warner Bros Discovery, the cable 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 together with film studios, consisting of Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

"Streaming won as a behavior," 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 brand-new corporate structure will separate growing studio and streaming assets from rewarding but shrinking cable television TV business, providing a clearer financial investment photo 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 might take a similar course.

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

"The question is not whether more pieces will be walked around or knocked off the board, or if further combination will take place-- it refers who is the purchaser and who is the seller," wrote Fishman.

Zaslav signified that scenario during Warner Bros Discovery's investor call last month. He said he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

Zaslav had actually taken part in merger talks with Paramount late in 2015, though a deal never ever materialized, according to a regulatory filing last month.

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

"The structure modification would make it simpler for WBD to sell its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable company. "However, discovering a purchaser will be difficult. The networks owe money and have no signs of development."

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

This week, the media business announced a multi-year offer increasing the total costs Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with an offer reached this year with cable television and broadband company Charter, will be a design template for future settlements with distributors. That could assist 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)