Shares jump 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds details, background, remarks from industry experts and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business stated the brand-new structure would be more deal friendly and it anticipated 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 services, a longtime golden goose where earnings are eroding as countless consumers accept streaming video.

Comcast last month unveiled strategies to divide the majority of its NBCUniversal cable television networks into a new public business. The new business would be well capitalized and placed to get other cable television networks if the market combines, one source informed Reuters.

Bank of America research expert Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable tv properties are a "really sensible partner" for Comcast's brand-new spin-off business.

"We highly think there is potential for fairly substantial synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the industry term for traditional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable television service 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 separate division along with movie 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 Discovery's Max are finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will distinguish growing studio and streaming possessions from lucrative however diminishing cable television TV business, giving a clearer investment photo and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser forecasted Paramount and others may take a similar path.

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 business for its next chess move, wrote MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be walked around or knocked off the board, or if further debt consolidation will take place-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that circumstance during Warner Bros Discovery's investor call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulative filing last month.

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

"The structure modification would make it easier for WBD to offer off its linear TV networks," eMarketer expert Ross Benes stated, referring to the cable television service. "However, discovering a buyer will be tough. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery wrote down the worth of its TV assets by over $9 billion due to unpredictability around charges from cable television and satellite suppliers and sports betting rights renewals.

Today, the media company announced a multi-year offer increasing the general charges 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 and broadband company Charter, will be a template for future settlements with distributors. That might assist 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)