Shares jump 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, comments from market experts and experts, updates share costs)

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, laying the foundation for a possible sale or spinoff of its TV organization 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 business are considering choices for fading cable television services, a long time money cow where incomes are wearing down as millions of customers embrace streaming video.

Comcast last month unveiled strategies to divide most of its NBCUniversal cable networks into a new public company. The new business would be well capitalized and placed to get other cable networks if the market consolidates, one source informed Reuters.

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

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

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

Under the brand-new structure for Warner Bros Discovery, the cable television 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 separate department together with film studios, consisting of 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 finally paying off.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will separate growing studio and streaming assets from lucrative however shrinking cable TV business, providing a clearer investment image and most likely setting the phase for a sale or spin-off of the cable system.

The media veteran and adviser predicted 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 bigger target, AT&T's WarnerMedia, is positioning the business for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be walked around or knocked off the board, or if additional debt consolidation will take place-- it is a matter of who is the buyer 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, unlocking to media industry debt consolidation.

Zaslav had participated in merger talks with Paramount late in 2015, though a deal never ever materialized, 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 simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television business. "However, finding a buyer will be challenging. The networks owe money and have no indications of growth."

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

Today, the media business revealed a multi-year offer increasing the general fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast arrangement, together with a deal reached this year with cable television and broadband supplier Charter, will be a design template for future negotiations with suppliers. That could help stabilize 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)