Shares jump 13% after restructuring announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds information, 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 declining cable television organizations such as CNN from streaming and studio operations such as Max, laying the foundation for a prospective sale or spinoff of its TV service as more cable television subscribers cut the cord.

Shares of Warner jumped after the business stated the 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 business are considering alternatives for fading cable television TV businesses, a long time golden goose where profits are deteriorating as countless consumers embrace streaming video.

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

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

"We highly believe there is potential for fairly substantial synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the industry term for traditional television.

"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 business 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 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 market, as financial investments in streaming services such as Warner Bros Discovery's Max are finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming assets from profitable but shrinking cable television organization, giving a clearer investment picture and likely setting the phase for a sale or spin-off of the cable unit.

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

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

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

Zaslav had engaged in merger talks with Paramount late in 2015, though an offer never ever emerged, according to a regulative filing last month.

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

"The structure change would make it much easier for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes stated, describing the cable television organization. "However, finding a buyer will be challenging. The networks owe money and have no signs of growth."

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

Today, the media company revealed a multi-year deal increasing the total fees 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 television and broadband provider Charter, will be a template for future settlements with suppliers. That could assist support 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)