Shares jump 13% after restructuring announcement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds information, background, comments 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 declining cable organizations such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV company as more cable television customers cut the cord.

Shares of Warner jumped after the business stated the brand-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 choices for fading cable TV organizations, a longtime money cow where incomes are eroding as millions of customers embrace streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable television networks into a new public business. The brand-new business would be well capitalized and positioned to acquire other cable television networks if the market combines, one source informed Reuters.

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

"We strongly believe there is capacity for relatively sizable synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable business 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 department in addition to movie studios, consisting of 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 investment firm Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming properties from profitable however shrinking cable service, giving a clearer financial investment photo and most likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and adviser forecasted Paramount and others might take a comparable path.

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

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

Zaslav signaled that circumstance throughout 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, opening the door to media industry consolidation.

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

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

"The structure change would make it much easier for WBD to sell its linear TV networks," eMarketer analyst Ross Benes said, referring to the cable business. "However, finding a buyer will be difficult. The networks owe money and have no indications of growth."

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

Today, the media business revealed a multi-year deal increasing the total charges Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with an offer reached this year with cable and broadband provider Charter, will be a design template for future settlements with suppliers. That might help support rates 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)