Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds information, background, remarks from industry experts and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped after the company said the 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 companies are considering choices for fading cable television TV organizations, a long time golden goose where earnings are deteriorating as countless consumers accept streaming video.

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

Bank of America research analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable possessions are a "extremely sensible partner" for Comcast's new spin-off company.

"We highly believe there is capacity 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 properties would be an attractive takeover target."

Under the new structure for Warner Bros Discovery, the cable television organization 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 division along with movie 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 settling.

"Streaming won as a habits," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming properties from successful however shrinking cable television service, offering a clearer financial investment picture and most likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and adviser 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 getting the even larger target, AT&T's WarnerMedia, is placing the company for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that scenario throughout Warner Bros Discovery's investor call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

Zaslav had engaged in merger talks with Paramount late last year, though an offer never ever emerged, according to a regulatory 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 simpler for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes stated, describing the cable company. "However, finding a buyer will be challenging. The networks owe money and have no signs of development."

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

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

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable and broadband supplier Charter, will be a design template for future settlements with suppliers. That could help stabilize rates for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles; by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)