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Shares jump 13% after restructuring statement
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Follows course taken by Comcast's new spin-off company
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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, comments from market experts and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the company 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 companies are considering alternatives for fading cable TV organizations, a long time golden goose where revenues are eroding as millions of customers embrace streaming video.

Comcast last month revealed plans to split many of its NBCUniversal cable television networks into a brand-new public business. The brand-new business would be well capitalized and positioned to acquire other cable networks if the industry consolidates, one source told Reuters.

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

"We strongly believe there is potential for fairly substantial synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional tv.

"Further, our company believe 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 different department in addition to film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will separate growing studio and streaming assets from profitable however diminishing cable television TV service, giving a clearer investment image and most likely setting the phase for a sale or spin-off of the cable television system.
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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 placing the business for its next chess relocation, composed MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if additional consolidation will take place-- it is a matter of who is the purchaser and who is the seller," composed Fishman.

Zaslav indicated that circumstance throughout Warner Bros Discovery's investor call last month. He stated he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry debt consolidation.

Zaslav had participated in merger talks with Paramount late in 2015, though a deal never materialized, according to a regulatory filing last month.

Others injected a note of caution, noting Warner Bros Discovery brings $40.4 billion in debt.
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"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer analyst Ross Benes stated, describing the cable business. "However, finding a purchaser will be tough. The networks owe money and have no signs of development."
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In August, Warner jotted down 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 arrangement, together with an offer reached this year with cable and broadband provider Charter, will be a design template for future negotiations with distributors. That might assist stabilize pricing 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)
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