Shares jump 13% after restructuring announcement

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

*

Challenges seen in offering debt-laden linear TV networks

(New throughout, adds details, background, comments from industry experts 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 decreasing cable television TV organizations such as CNN from streaming and studio operations such as Max, preparing for a possible sale or spinoff of its TV company as more cable customers cut the cable.

Shares of Warner leapt after the company said 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 companies, a long time golden goose where profits are deteriorating as countless customers accept streaming video.

Comcast last month unveiled plans to divide most of its NBCUniversal cable television networks into a brand-new public business. The 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 wrote that Warner Bros Discovery's cable assets are a "really rational partner" for Comcast's brand-new spin-off business.

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

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

Under the new structure for Warner Bros Discovery, the cable TV company 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 along with film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will differentiate growing studio and streaming assets from successful however diminishing cable TV organization, providing a clearer investment image and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and consultant forecasted Paramount and others may take a similar 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 move, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if additional debt consolidation will take place-- it refers who is the buyer and who is the seller," wrote Fishman.

Zaslav signified 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 market combination.

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

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

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

In August, Warner Bros Discovery documented the value of its TV assets by over $9 billion due to unpredictability 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 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 television and broadband company Charter, will be a template for future negotiations with distributors. That could 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)