Shares dive 13% after reorganizing statement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds details, background, comments 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 decided to separate its decreasing cable services 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 television customers cut the cable.

Shares of Warner jumped after the company stated the new structure would be more deal friendly and it expected to finish 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 organizations, a longtime golden goose where incomes are eroding as millions of consumers welcome streaming video.

Comcast last month unveiled plans to divide many of its NBCUniversal cable networks into a new public business. The brand-new business would be well capitalized and placed to obtain other cable television networks if the industry combines, one source informed Reuters.

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

"We strongly think there is potential for relatively substantial synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the industry term for traditional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable television company including TNT, Animal Planet and CNN will be housed in an unit 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 financial investments in streaming services such as Warner Bros Discovery's Max are finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will differentiate growing studio and streaming assets from lucrative however diminishing cable television TV organization, offering 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 might take a comparable course.

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

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

Zaslav signified that circumstance 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 industry consolidation.

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

Others injected a note of caution, keeping in mind Warner Bros Discovery brings $40.4 billion in financial obligation.

"The structure change would make it easier for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable service. "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 possessions by over $9 billion due to uncertainty around costs from cable television and satellite suppliers and sports betting rights renewals.

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

Warner Bros Discovery is sports betting the Comcast arrangement, together with an offer reached this year with cable and broadband supplier Charter, will be a template for future negotiations with suppliers. That might 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)