Shares dive 13% after restructuring announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes information, background, comments from market insiders and experts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its decreasing cable television services such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV company as more cable television subscribers cut the cable.

Shares of Warner leapt after the business 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 television TV companies, a longtime money cow where incomes are deteriorating as millions of customers accept streaming video.

Comcast last month unveiled strategies to divide many of its NBCUniversal cable television networks into a brand-new public business. The new business would be well capitalized and placed to obtain other cable television networks if the industry combines, one source told Reuters.

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

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

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

Under the new structure for Warner Bros Discovery, the cable television business 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 division together with film studios, consisting of 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 lastly paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming possessions from successful however diminishing cable organization, giving a clearer investment image and likely setting the phase for a sale or spin-off of the cable system.

The media veteran and advisor forecasted Paramount and others may take a similar course.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before getting the even larger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that situation throughout Warner Bros Discovery's financier call last month. He stated he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market debt consolidation.

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

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

"The structure change would make it easier for WBD to sell its direct TV networks," eMarketer expert Ross Benes said, describing the cable television TV service. "However, discovering a purchaser will be tough. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery jotted down the worth of its TV assets by over $9 billion due to uncertainty around fees from cable and satellite suppliers and sports betting rights renewals.

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

Warner Bros Discovery is wagering the Comcast arrangement, together with an offer reached this year with cable and broadband company Charter, will be a template for future settlements 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)