Shares jump 13% after reorganizing announcement

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

*

Challenges seen in selling debt-laden linear TV networks

(New throughout, includes details, background, comments from market experts and analysts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable television TV 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 subscribers cut the cable.

Shares of Warner jumped after the company stated the brand-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 thinking about choices for fading cable television organizations, a longtime money cow where profits are eroding as millions of consumers accept streaming video.

Comcast last month revealed strategies to divide most of its NBCUniversal cable television networks into a brand-new public business. The brand-new business would be well capitalized and positioned to get other cable networks if the industry consolidates, one source informed Reuters.

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

"We highly think there is capacity for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," wrote Ehrlich, using the market term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable organization consisting of 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 division in addition to movie studios, including 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," stated Jonathan Miller, chief executive 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 business structure will separate growing studio and streaming properties from successful however diminishing cable company, offering a clearer investment image and likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser forecasted Paramount and others might take a comparable 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 positioning the business for its next chess move, wrote MoffettNathanson analyst Robert Fishman.

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

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

Zaslav had taken part in merger talks with Paramount late last year, though an offer never emerged, according to a regulatory filing last month.

Others injected a note of care, keeping in mind Warner Bros Discovery carries $40.4 billion in debt.

"The structure change would make it easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable business. "However, finding a purchaser will be difficult. The networks owe money and have no signs 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 and satellite suppliers and sports betting rights renewals.

This week, the media company revealed a multi-year offer increasing the total fees Comcast will pay to disperse 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 provider Charter, will be a template for future settlements with distributors. That could assist support 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)