Shares dive 13% after restructuring statement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes information, background, comments from industry insiders and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business stated the brand-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 options for fading cable television TV organizations, a longtime cash cow where incomes are wearing down as millions of consumers welcome streaming video.

Comcast last month revealed plans to divide the majority of its NBCUniversal cable television networks into a brand-new public business. The brand-new business would be well capitalized and placed to obtain other cable networks if the market consolidates, one source told Reuters.

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

"We strongly think there is potential for fairly sizable synergies if WBD's direct networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for standard tv.

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

Under the new structure for Warner Bros Discovery, the cable TV 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 different department together with film 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 finally paying off.

"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 stated Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming assets from profitable but diminishing cable TV business, offering a clearer financial investment image and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and consultant predicted Paramount and others might take a similar course.

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 business for its next chess relocation, wrote MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if further consolidation will take place-- 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 investor call last month. He stated he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media industry debt consolidation.

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

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

"The structure change would make it much easier for WBD to sell its linear TV networks," eMarketer analyst Ross Benes stated, referring to the cable business. "However, finding a buyer will be difficult. The networks are in financial obligation and have no signs of growth."

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

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

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