Shares dive 13% after reorganizing statement

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

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds details, background, comments from industry insiders and analysts, updates share costs)
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By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped 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 business are thinking about choices for fading cable television TV services, a long time cash cow where earnings are eroding as millions of consumers embrace streaming video.

Comcast last month unveiled strategies to divide the majority of its NBCUniversal cable television networks into a brand-new public company. The brand-new company would be well capitalized and positioned to obtain other cable networks if the market combines, one source told Reuters.
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Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable properties are a "extremely sensible partner" for Comcast's brand-new spin-off company.

"We highly believe there is potential for fairly sizable synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for standard 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 company 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 division together with film studios, including 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 lastly settling.

"Streaming won as a behavior," said Jonathan Miller, president of digital media investment firm Integrated Media. "Now, it's winning as a service."
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Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new business structure will distinguish growing studio and streaming possessions from profitable however shrinking cable organization, giving a clearer financial investment picture and most likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and adviser predicted Paramount and others may take a similar course.
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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 placing the business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if further consolidation will happen-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signified that scenario during Warner Bros Discovery's financier call last month. He said he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry combination.

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

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

"The structure change would make it much easier for WBD to sell off its linear TV networks," eMarketer analyst Ross Benes said, describing the cable company. "However, finding a buyer will be tough. The networks are in debt and have no signs of growth."
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In August, Warner Bros Discovery jotted down the worth of its TV properties by over $9 billion due to uncertainty around costs from cable television and satellite distributors and sports betting rights renewals.

Today, the media business 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 a deal reached this year with cable and broadband company Charter, will be a template for with distributors. That might help stabilize pricing 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)