Shares jump 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, includes information, background, comments 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 decided to separate its declining cable television organizations such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV business as more cable television subscribers cut the cable.

Shares of Warner leapt after the business 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 companies, a long time golden goose where earnings are eroding as millions of customers embrace streaming video.

Comcast last month revealed strategies to divide most of its NBCUniversal cable television networks into a new public business. The 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 study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service possessions are a "extremely logical partner" for Comcast's brand-new spin-off business.

"We strongly think there is capacity for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for conventional television.

"Further, we believe WBD's standalone streaming and studio properties would be an attractive 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 a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a different department together with movie 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 paying off.

"Streaming won as a habits," 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 new business structure will differentiate growing studio and streaming properties from profitable however diminishing cable television organization, providing a clearer investment picture and likely setting the phase for a sale or spin-off of the cable system.

The media veteran and consultant forecasted Paramount and others might 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 positioning the company for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be moved or knocked off the board, or if more consolidation will happen-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

Zaslav signified that circumstance during Warner Bros Discovery's financier call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry debt 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 caution, keeping in mind Warner Bros Discovery carries $40.4 billion in debt.

"The structure change would make it easier for WBD to sell its linear TV networks," eMarketer analyst Ross Benes said, describing the cable service. "However, finding a buyer will be tough. The networks are in financial obligation and have no signs of development."

In August, Warner Bros Discovery wrote down the value of its TV possessions by over $9 billion due to unpredictability around fees from cable and satellite suppliers and sports betting rights renewals.

Today, the media business announced a multi-year offer increasing the total fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with an offer reached this year with cable television and broadband service 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; by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)