Shares jump 13% after reorganizing statement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, includes details, background, comments 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 TV organizations such as CNN from streaming and studio operations such as Max, laying the foundation for a potential sale or spinoff of its TV business as more cable customers cut the cable.

Shares of Warner jumped after the company stated 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 options for fading cable TV companies, a longtime cash cow where earnings are deteriorating as countless customers embrace streaming video.

Comcast last month revealed strategies to divide the majority of its NBCUniversal cable networks into a new public company. The new company would be well capitalized and positioned to acquire other cable television networks if the market combines, one source informed Reuters.

Bank of America research study analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable tv assets are a "really rational partner" for Comcast's new spin-off company.

"We highly think there is potential for fairly sizable synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for conventional television.

"Further, our company believe WBD's standalone streaming and studio possessions would be an attractive takeover target."

Under the new structure for Warner Bros Discovery, the cable TV 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 separate department together with movie studios, including Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media market, as 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 company Integrated Media. "Now, it's winning as a business."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming possessions from lucrative however shrinking cable organization, providing a clearer investment picture and most likely setting the phase for a sale or spin-off of the cable system.

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

"The concern is not whether more pieces will be walked around or knocked off the board, or if further consolidation will happen-- it refers who is the purchaser and who is the seller," wrote Fishman.

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

Zaslav had actually taken part in merger talks with Paramount late in 2015, though a deal never materialized, 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 much easier for WBD to sell off its linear TV networks," eMarketer expert Ross Benes said, describing the cable television service. "However, finding a buyer will be difficult. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery made a note of 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 revealed a multi-year offer increasing the overall costs 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 television and broadband service provider Charter, will be a template for future settlements with suppliers. That might assist stabilize rates 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)