Shares dive 13% after reorganizing announcement

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, adds details, 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 declining cable services such as CNN from streaming and studio operations such as Max, laying the groundwork for a potential sale or spinoff of its TV business as more cable television subscribers cut the cord.

Shares of Warner leapt after the company said 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 business are considering alternatives for fading cable television TV businesses, a longtime money cow where revenues are deteriorating as millions of consumers accept streaming video.

Comcast last month unveiled plans to split many of its NBCUniversal cable networks into a new public business. The new business would be well capitalized and positioned to obtain other cable networks if the industry combines, one source told Reuters.

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

"We highly believe there is potential for fairly substantial synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, using the market term for standard television.

"Further, our company believe WBD's standalone streaming and studio possessions would be an appealing takeover target."

Under the new structure for Warner Bros Discovery, the cable organization including 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, 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, chief executive of digital media investment firm Integrated Media. "Now, it's winning as an organization."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming possessions from rewarding but shrinking cable service, giving a clearer investment photo and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and adviser predicted Paramount and others may 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 larger target, AT&T's WarnerMedia, is placing the company 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 further consolidation will happen-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

Zaslav signaled that circumstance 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 consolidation.

Zaslav had participated in merger talks with Paramount late last year, though a deal never ever emerged, according to a regulative filing last month.

Others injected a note of caution, keeping in mind Warner Bros Discovery brings $40.4 billion in financial obligation.

"The structure modification would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television business. "However, discovering a buyer will be challenging. The networks owe money and have no indications of development."

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

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 arrangement, together with a deal reached this year with cable and broadband service provider Charter, will be a design template for future settlements with distributors. That could help 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)