Shares dive 13% after reorganizing statement

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, remarks from market experts and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose 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 cable.

Shares of Warner leapt after the business stated the new structure would be more deal friendly and it anticipated to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media companies are thinking about options for fading cable television companies, a longtime golden goose where revenues are wearing down as millions of customers accept streaming video.

Comcast last month revealed strategies to split most of its NBCUniversal cable networks into a new public business. The new business would be well capitalized and positioned to acquire other cable networks if the market consolidates, one source informed Reuters.

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

"We highly think there is potential for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, utilizing the industry term for standard tv.

"Further, our company 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 company 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 separate division in addition to film studios, consisting of 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 finally settling.

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

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

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

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

Zaslav signified 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, opening the door to media market combination.

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

Others injected a note of caution, noting Warner Bros Discovery brings $40.4 billion in financial obligation.

"The structure change would make it much easier for WBD to sell off its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable television service. "However, discovering a buyer will be difficult. The networks are in financial obligation and have no signs of growth."

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

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

Warner Bros Discovery is wagering the Comcast arrangement, together with a deal reached this year with cable and broadband company Charter, will be a template for future negotiations with distributors. That could help stabilize 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)