Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds information, background, remarks from industry experts 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 businesses such as CNN from streaming and studio operations such as Max, laying the foundation for a potential sale or spinoff of its TV service as more cable subscribers cut the cord.

Shares of Warner jumped after the company stated the brand-new structure would be more deal friendly and it expected 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 TV organizations, a long time golden goose where profits are deteriorating as millions of consumers embrace streaming video.

Comcast last month unveiled strategies to divide the majority of its NBCUniversal cable networks into a new public company. The brand-new company would be well capitalized and placed to get other cable television networks if the industry consolidates, one source informed Reuters.

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

"We highly believe there is capacity for relatively large synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, using the industry term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable company 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 market, as financial investments in streaming services such as Warner Bros Discovery's Max are finally paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will separate growing studio and streaming properties from lucrative but diminishing cable television TV service, giving a clearer investment image and likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and adviser anticipated Paramount and others may take a comparable path.

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 expert Robert Fishman.

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

Zaslav signaled that circumstance 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 industry combination.

Zaslav had taken part in merger talks with Paramount late last year, though a deal never ever emerged, 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 simpler for WBD to sell its direct TV networks," eMarketer expert Ross Benes said, describing the cable organization. "However, discovering a purchaser will be difficult. The networks are in financial obligation and have no indications of growth."

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

This week, the media company revealed a multi-year deal increasing the total fees Comcast will pay to disperse Warner Bros Discovery's networks.

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