Shares dive 13% after restructuring statement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes information, background, comments from industry insiders 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 organizations such as CNN from streaming and studio operations such as Max, laying the groundwork for a potential sale or spinoff of its TV service as more cable television customers cut the cord.

Shares of Warner leapt after the business stated 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 thinking about choices for fading cable television businesses, a longtime cash cow where incomes are eroding as millions of customers accept streaming video.

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

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

"We strongly believe there is potential for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," wrote Ehrlich, using the industry term for standard tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV service including 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 department in addition to movie studios, consisting of 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 lastly paying off.

"Streaming won as a behavior," stated 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 new corporate structure will differentiate growing studio and streaming properties from lucrative however diminishing cable business, providing a clearer investment photo and most likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and consultant anticipated 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 acquiring the even bigger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

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

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

Zaslav had actually participated in merger talks with Paramount late last year, though a deal never ever emerged, according to a regulatory filing last month.

Others injected a note of care, noting Warner Bros Discovery brings $40.4 billion in debt.

"The structure modification would make it simpler for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable television service. "However, finding a buyer will be challenging. The networks are in debt and have no indications of development."

In August, Warner Bros Discovery made a note of the value of its TV properties by over $9 billion due to unpredictability around costs from cable and satellite distributors and sports betting rights renewals.

Today, the media company announced a multi-year deal increasing the total costs Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable television and broadband service provider Charter, will be a template for future negotiations with suppliers. That might help stabilize 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)