Shares dive 13% after reorganizing statement
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Follows path taken by Comcast's brand-new spin-off business

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Challenges seen in selling debt-laden direct TV networks
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(New throughout, includes details, background, remarks from market insiders 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 decreasing cable TV services such as CNN from streaming and studio operations such as Max, preparing for a possible sale or spinoff of its TV service as more cable television customers cut the cord.

Shares of Warner leapt after the company stated the brand-new structure would be more deal friendly and it anticipated to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are thinking about options for fading cable businesses, a long time cash cow where incomes are eroding as millions of consumers accept streaming video.
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Comcast last month unveiled strategies to split most of its television networks into a new public company. The brand-new business would be well capitalized and positioned to acquire other cable networks if the industry combines, one source told Reuters.

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

"We highly believe there is capacity for relatively large synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, using the market term for traditional tv.
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"Further, our company believe WBD's standalone streaming and studio possessions would be an attractive takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable television service 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 shows an inflection point for the media industry, as financial investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

"Streaming won as a behavior," said Jonathan Miller, chief executive of digital media investment company Integrated Media. "Now, it's winning as a service."

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

The media veteran and adviser forecasted Paramount and others might take a similar path.

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 move, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav signaled that situation throughout 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 market debt 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 care, noting Warner Bros Discovery brings $40.4 billion in debt.
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"The structure modification would make it simpler for WBD to sell its direct TV networks," eMarketer expert Ross Benes stated, referring to the cable TV business. "However, finding a buyer will be difficult. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery documented the worth of its TV possessions by over $9 billion due to uncertainty around charges from cable and satellite distributors and sports betting rights renewals.

Today, the media business revealed a multi-year offer increasing the general charges Comcast will pay to distribute Warner Bros Discovery's networks.

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