Shares jump 13% after reorganizing statement

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

*

Challenges seen in offering debt-laden linear TV networks

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

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its decreasing cable television organizations such as CNN from streaming and studio operations such as Max, laying the foundation for a potential sale or spinoff of its TV service as more cable 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 considering choices for fading cable services, a longtime golden goose where profits are deteriorating as countless consumers embrace streaming video.

Comcast last month unveiled strategies to split most of its NBCUniversal cable networks into a brand-new public company. The new company would be well capitalized and positioned to obtain other cable networks if the industry consolidates, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable tv possessions are a "really logical partner" for Comcast's brand-new spin-off company.

"We highly think there is capacity for relatively large synergies if WBD's linear 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 properties would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television business 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 different division together with film studios, including Warner Bros Pictures and New Line Cinema.

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

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment company Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming possessions from lucrative but shrinking cable television business, giving a clearer financial investment picture and most likely setting the phase for a sale or spin-off of the cable unit.

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 bigger target, AT&T's WarnerMedia, is placing the company for its next chess move, wrote MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if further combination will occur-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signified that situation throughout Warner Bros Discovery's investor call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market combination.

Zaslav had taken part in merger talks with Paramount late in 2015, though an offer never ever emerged, according to a regulative filing last month.

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

"The structure modification would make it much easier for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable TV business. "However, discovering a purchaser will be difficult. The networks owe money and have no indications of growth."

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

Today, the media company revealed a multi-year deal increasing the general charges Comcast will pay to disperse 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 company Charter, will be a template for future negotiations with distributors. That might assist stabilize 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)