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Shares jump 13% after reorganizing statement

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, includes information, background, comments from market experts and analysts, updates share costs)

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 TV companies such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV business as more cable television subscribers cut the cord.

Shares of Warner jumped after the company said the 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 business are thinking about alternatives for fading cable organizations, a long time golden goose where incomes are deteriorating as millions of consumers welcome streaming video.

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

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

"We strongly think there is potential for relatively substantial synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, using the market term for traditional television.
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"Further, we believe WBD's standalone streaming and studio assets would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television business 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 division together with movie studios, consisting of Warner Bros Pictures and New Line Cinema.
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The restructuring reflects an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are finally settling.
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"Streaming won as a habits," stated Jonathan Miller, chief executive of digital media investment firm Integrated Media. "Now, it's winning as a service."

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will separate growing studio and streaming properties from profitable but shrinking cable business, offering a clearer investment image and likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and advisor predicted Paramount and others may take a similar 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 company for its next chess move, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that scenario during Warner Bros Discovery's investor 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 debt consolidation.

Zaslav had actually engaged in merger talks with late in 2015, though an offer never materialized, according to a regulative filing last month.

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

"The structure modification would make it easier for WBD to offer off its direct TV networks," eMarketer expert Ross Benes stated, describing the cable television service. "However, discovering a buyer will be difficult. 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 possessions by over $9 billion due to uncertainty around charges from cable television and satellite suppliers and sports betting rights renewals.

Today, the media business announced a multi-year deal increasing the overall charges Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with a deal reached this year with cable and broadband supplier Charter, will be a template for future negotiations with suppliers. That might assist 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)