Shares jump 13% after restructuring statement

Follows course 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 details, 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 chose to separate its declining cable television services such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV company as more cable subscribers cut the cable.

Shares of Warner jumped after the company said the brand-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 options for fading cable television TV companies, a longtime golden goose where incomes are deteriorating as countless customers accept streaming video.

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

Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service properties are a "very logical partner" for Comcast's new spin-off business.

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

"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 television business including 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, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media market, as financial investments in streaming services such as Warner Bros Discovery's Max are lastly paying off.

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

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

The media veteran and advisor predicted 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 more debt consolidation will take place-- it refers who is the purchaser and who is the seller," composed Fishman.

Zaslav signified that situation during Warner Bros Discovery's investor call last month. He stated he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market consolidation.

Zaslav had actually engaged in merger talks with Paramount late last year, though an offer never ever materialized, according to a regulatory filing last month.

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

"The structure change would make it simpler for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes said, describing the cable television organization. "However, finding a purchaser will be tough. The networks are in debt and have no indications of growth."

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

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

Warner Bros Discovery is sports betting the Comcast agreement, together with a deal reached this year with cable and broadband supplier Charter, will be a design template for future settlements with distributors. 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)