Shares jump 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, includes information, background, comments from market 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 businesses such as CNN from streaming and studio operations such as Max, laying the foundation for a prospective sale or spinoff of its TV company as more cable television customers cut the cable.

Shares of Warner leapt after the company said 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 considering alternatives for fading cable organizations, a longtime money cow where incomes are deteriorating as countless customers embrace streaming video.

Comcast last month unveiled plans to split most of its NBCUniversal cable networks into a brand-new public company. The brand-new business would be well capitalized and positioned to obtain other cable networks if the market combines, one source informed Reuters.

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

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

"Further, we think WBD's standalone streaming and studio properties would be an appealing 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 different department along with movie studios, including 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," stated 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 corporate structure will differentiate growing studio and streaming assets from lucrative however diminishing cable organization, providing a clearer financial investment picture and likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and adviser 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 acquiring the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, wrote MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if additional combination will take place-- it refers who is the buyer and who is the seller," wrote Fishman.

Zaslav indicated that situation 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 combination.

Zaslav had actually engaged 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 care, noting Warner Bros Discovery brings $40.4 billion in financial obligation.

"The structure modification would make it simpler for WBD to sell its direct TV networks," eMarketer analyst Ross Benes said, describing the cable television company. "However, discovering a purchaser will be difficult. The networks are in financial obligation and have no signs of development."

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

Today, the media company revealed a multi-year offer increasing the overall costs 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 and broadband company Charter, will be a design template for future settlements with suppliers. That might assist support 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)