Shares jump 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds information, background, comments from industry insiders and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining cable television TV services 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 customers cut the cable.

Shares of Warner jumped after the business stated 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 options for fading cable television TV organizations, a long time golden goose where earnings are wearing down as countless consumers embrace streaming video.

Comcast last month unveiled strategies to split many of its NBCUniversal cable television networks into a brand-new public business. The new company would be well capitalized and placed to get other cable television networks if the industry combines, 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 rational partner" for Comcast's brand-new spin-off business.

"We highly think there is capacity for relatively sizable synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the market term for standard television.

"Further, we think WBD's standalone streaming and studio properties would be an attractive takeover target."

Under the new structure for Warner Bros Discovery, the cable service 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 division along with film studios, including Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from lucrative but shrinking cable business, giving a clearer financial investment picture and most likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and adviser forecasted Paramount and others might take a similar 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 business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that circumstance 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 combination.

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

Others injected a note of care, keeping in mind Warner Bros Discovery brings $40.4 billion in debt.

"The structure modification would make it much easier for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, describing the cable organization. "However, discovering a purchaser will be tough. The networks owe money and have no indications of growth."

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

This week, the media business announced a multi-year deal increasing the general fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with a deal reached this year with cable television and broadband provider Charter, will be a design template for future settlements with distributors. That might help 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)