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Shares jump 13% after reorganizing 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, adds information, background, comments from industry insiders and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni
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Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable television services such as CNN from streaming and studio operations such as Max, laying the foundation for a prospective sale or spinoff of its TV business as more cable customers cut the cord.
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Shares of Warner jumped after the business said the brand-new structure would be more deal friendly and it expected to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media companies are thinking about alternatives for fading cable TV companies, a longtime cash cow where profits are eroding as countless customers embrace streaming video.

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

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

"We highly believe there is potential for relatively sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," composed Ehrlich, using the industry term for standard television.
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"Further, we think WBD's standalone streaming and studio assets would be an attractive takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable TV 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 along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media market, as financial investments in streaming services such as Warner Bros Discovery's Max are finally settling.

"Streaming won as a behavior," 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 new business structure will separate growing studio and streaming possessions from lucrative however shrinking cable TV organization, offering a clearer investment image and likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and consultant predicted Paramount and others might take a comparable 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, wrote MoffettNathanson analyst Robert Fishman.
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"The concern is not whether more pieces will be moved around or knocked off the board, or if additional debt consolidation will occur-- it is a matter of who is the buyer and who is the seller," composed Fishman.
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Zaslav indicated that situation 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, unlocking to media industry combination.

Zaslav had actually engaged in merger talks with last year, though an offer never emerged, according to a regulative filing last month.

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

"The structure change would make it much easier for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable service. "However, discovering a purchaser will be tough. The networks are in financial obligation and have no signs of growth."

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

Today, the media business announced a multi-year offer increasing the total fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with an offer reached this year with cable and broadband company Charter, will be a design template for future settlements with distributors. 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)