Shares jump 13% after restructuring statement

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

*

Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, remarks from market insiders and experts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable businesses such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV business as more cable customers cut the cable.

Shares of Warner leapt after the business said the brand-new structure would be more deal friendly and it expected to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media companies are considering options for fading cable television TV organizations, a longtime golden goose where profits are deteriorating as countless customers embrace streaming video.

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

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

"We highly think there is potential for fairly sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the industry term for conventional television.

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

Under the new structure for Warner Bros Discovery, the cable television 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 different 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 financial 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 financial investment business Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will separate growing studio and streaming properties from rewarding but shrinking cable television TV service, giving a clearer investment picture and likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and consultant anticipated Paramount and others might take a comparable 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 positioning the business for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if more debt consolidation will occur-- it refers who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that scenario during Warner Bros Discovery's financier call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry consolidation.

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

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

"The structure modification would make it simpler for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable business. "However, discovering a buyer will be challenging. 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 television and satellite suppliers and sports betting rights renewals.

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

Warner Bros Discovery is wagering the Comcast arrangement, together with an offer reached this year with cable and broadband supplier Charter, will be a template for future negotiations with suppliers. That might assist 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)