Shares jump 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, adds details, background, remarks from industry insiders and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining cable TV businesses such as CNN from streaming and studio operations such as Max, laying the foundation for a possible sale or spinoff of its TV organization as more cable television subscribers cut the cable.

Shares of Warner jumped after the company said the 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 alternatives for fading cable television services, a longtime cash cow where incomes are wearing down as millions of consumers embrace streaming video.

Comcast last month unveiled plans to divide many of its NBCUniversal cable networks into a brand-new public company. The new company would be well capitalized and positioned to get other cable television networks if the industry consolidates, one source told Reuters.

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

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

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

Under the new structure for Warner Bros Discovery, the cable television company 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 department together 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 finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming possessions from profitable however diminishing cable television company, offering a clearer financial investment photo and likely setting the stage for a sale or spin-off of the cable system.

The media veteran and advisor anticipated Paramount and others may take a similar course.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before acquiring the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that circumstance during 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 combination.

Zaslav had taken part in merger talks with Paramount late in 2015, though a deal never materialized, according to a regulative filing last month.

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

"The structure modification would make it easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes said, describing the cable TV organization. "However, discovering a purchaser will be tough. The networks are in debt and have no indications of development."

In August, Warner Bros Discovery jotted down the worth of its TV assets by over $9 billion due to unpredictability around charges from cable television and satellite distributors and sports betting rights renewals.
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This week, the media business revealed a multi-year offer increasing the overall costs Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with a this year with cable television and broadband service provider Charter, will be a design template for future settlements with distributors. That might help stabilize pricing for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles