Shares dive 13% after reorganizing announcement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds information, background, remarks from industry experts and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its decreasing cable television businesses such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV organization as more cable subscribers cut the cord.

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

Media business are considering alternatives for fading cable television TV services, a long time golden goose where profits are deteriorating as countless consumers 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 placed to acquire other cable networks if the market combines, one source informed Reuters.

Bank of America research analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service properties are a "really sensible partner" for Comcast's new spin-off company.

"We strongly believe there is capacity for relatively substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the market term for traditional tv.

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

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

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

"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 stated Warner Bros Discovery's brand-new corporate structure will separate growing studio and streaming properties from lucrative however diminishing cable television TV organization, giving a clearer investment photo and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and consultant forecasted Paramount and others may take a comparable 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 business for its next chess move, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if more combination will take place-- it is a matter of who is the purchaser and who is the seller," wrote Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

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

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

"The structure modification would make it simpler for WBD to sell off its linear TV networks," eMarketer expert Ross Benes said, describing the cable television TV company. "However, discovering a buyer will be tough. The networks owe money and have no indications 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.

This week, the media company revealed a multi-year offer increasing the overall charges 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 design template for future negotiations with suppliers. That could help 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)