Shares jump 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds details, background, remarks from industry experts and experts, 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 TV businesses such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV business as more cable television subscribers cut the cable.

Shares of Warner jumped after the business said the brand-new structure would be more deal friendly and it anticipated to finish 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 companies, a longtime money cow where incomes are deteriorating as countless customers embrace streaming video.

Comcast last month revealed strategies 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 get other cable television networks if the industry combines, one source informed Reuters.

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

"We highly think there is capacity for fairly large synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard television.

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

Under the brand-new structure for Warner Bros Discovery, the cable television TV service 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 reflects an inflection point for the media market, as investments in streaming services such as Warner Bros Discovery's Max are finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming properties from profitable but diminishing cable TV service, offering a clearer investment picture and likely setting the stage for a sale or spin-off of the cable system.

The media veteran and adviser 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 positioning the company for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if further consolidation will take place-- it refers who is the purchaser and who is the seller," wrote Fishman.

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

Zaslav had actually engaged in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulative filing last month.

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

"The structure change would make it simpler for WBD to sell off its direct TV networks," eMarketer analyst Ross Benes said, referring to the cable business. "However, finding a purchaser will be challenging. The networks are in financial obligation and have no signs of growth."

In August, Warner Bros Discovery documented the value of its TV properties by over $9 billion due to unpredictability around costs from cable and satellite distributors and sports betting rights renewals.

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

Warner Bros Discovery is wagering the Comcast arrangement, together with an offer reached this year with cable television and broadband supplier Charter, will be a design template for future settlements 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)