Shares dive 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 information, background, comments from market insiders and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining cable organizations such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV company as more cable customers cut the cable.

Shares of Warner leapt after the company stated 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 companies are considering options for fading cable TV organizations, a longtime money cow where revenues are wearing down as countless customers accept streaming video.

Comcast last month revealed plans to divide the majority of its NBCUniversal cable television networks into a new public business. The brand-new company would be well capitalized and placed to acquire other cable networks if the market consolidates, one source told Reuters.

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

"We strongly think there is capacity for fairly substantial synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, using the market term for traditional television.

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

Under the brand-new structure for Warner Bros Discovery, the cable service consisting of TNT, Animal Planet and CNN will be housed in an unit called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate division in addition to film 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 settling.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming assets from lucrative but diminishing cable business, providing a clearer financial investment photo 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 course.

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 positioning 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 more debt consolidation will occur-- it refers who is the purchaser and who is the seller," wrote Fishman.

Zaslav signified that scenario throughout Warner Bros Discovery's financier call last month. He stated he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry consolidation.

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

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

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

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

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

Warner Bros Discovery is sports betting the Comcast arrangement, together with an offer reached this year with cable and broadband company 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)