Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, remarks from market insiders 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 TV services such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV company as more cable subscribers cut the cord.

Shares of Warner jumped after the business stated 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 companies are thinking about alternatives for fading cable television businesses, a longtime cash cow where earnings are deteriorating as countless customers accept streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable networks into a new public company. The new company would be well capitalized and placed to get other cable networks if the industry consolidates, one source told Reuters.

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

"We strongly believe there is capacity for relatively substantial synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the industry term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable television TV 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 separate department in addition to 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 paying off.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new business structure will distinguish growing studio and streaming properties from lucrative however diminishing cable television business, offering a clearer investment image and likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and advisor anticipated 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 obtaining the even larger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, wrote MoffettNathanson expert 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 buyer and who is the seller," composed Fishman.

Zaslav signified that scenario throughout Warner Bros Discovery's financier call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry consolidation.

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

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

"The structure change would make it easier for WBD to sell its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable organization. "However, discovering a buyer will be challenging. The networks are in financial obligation and have no signs of growth."

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

Today, the media business announced a multi-year offer increasing the general costs Comcast will pay to disperse Warner Bros Discovery's networks.

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