Shares dive 13% after reorganizing statement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes information, background, remarks from market insiders and analysts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the company 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 business are considering options for fading cable television services, a longtime golden goose where incomes are eroding as millions of customers welcome streaming video.

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

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

"We strongly think there is potential for relatively sizable synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable TV business consisting of 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, 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 lastly settling.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from successful however shrinking cable television organization, providing a clearer investment image and likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and advisor 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 obtaining the even larger target, AT&T's WarnerMedia, is placing the business for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He stated he expected 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 last year, though an offer never ever emerged, according to a regulatory filing last month.

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

"The structure modification would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable service. "However, finding a purchaser will be challenging. The networks owe money and have no signs of development."

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

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

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