Shares jump 13% after restructuring announcement
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Follows course taken by Comcast's brand-new spin-off company

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Challenges seen in offering debt-laden linear TV networks

(New throughout, includes details, background, comments from industry experts and experts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the company stated the new structure would be more deal friendly and it anticipated 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 television companies, a long time where profits are deteriorating as countless customers embrace streaming video.

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

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

"We strongly believe there is potential for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional tv.

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

Under the new structure for Warner Bros Discovery, the cable organization 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 department along with movie studios, consisting of Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media industry, as investments in streaming services such as Warner Bros Discovery's Max are lastly settling.

"Streaming won as a habits," stated Jonathan Miller, president 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 assets from profitable however diminishing cable service, giving a clearer investment photo and likely setting the stage for a sale or spin-off of the cable unit.

The media veteran and advisor predicted Paramount and others might take a comparable course.

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

"The concern is not whether more pieces will be moved around or knocked off the board, or if additional debt consolidation will happen-- it refers 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 said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market debt consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though a deal never ever 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 change would make it simpler for WBD to sell its linear TV networks," eMarketer analyst Ross Benes said, referring to the cable business. "However, discovering a purchaser will be difficult. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery jotted down the value of its TV possessions by over $9 billion due to unpredictability around charges from cable and satellite distributors and sports betting rights renewals.
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This week, the media company revealed a multi-year deal increasing the total charges Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with an offer reached this year with cable and broadband provider Charter, will be a design template for future negotiations with distributors. That might assist 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)
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