Shares jump 13% after restructuring announcement

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

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Challenges seen in offering debt-laden direct TV networks

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

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday chose to separate its declining cable television companies such as CNN from streaming and studio operations such as Max, laying the groundwork for a possible sale or spinoff of its TV company as more cable subscribers cut the cable.

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

Media companies are thinking about choices for fading cable television organizations, a long time golden goose where incomes are eroding as millions of customers embrace streaming video.

Comcast last month revealed plans to split most of its NBCUniversal cable television networks into a brand-new public business. The brand-new business would be well capitalized and placed to get other cable television networks if the industry combines, one source informed Reuters.

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

"We strongly think there is potential for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable television organization consisting of TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a different department along with film studios, consisting of Warner Bros Pictures and New Line Cinema.

The restructuring shows 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," stated Jonathan Miller, primary executive of digital media investment firm Integrated Media. "Now, it's winning as a company."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming properties from successful but shrinking cable organization, offering a clearer financial investment picture and most 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 comparable course.

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

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

Zaslav signaled that circumstance during 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 industry combination.

Zaslav had actually engaged 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 care, noting Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure modification would make it much easier for WBD to offer off its direct TV networks," eMarketer analyst Ross Benes stated, describing the cable TV business. "However, finding a buyer will be difficult. The networks are in financial obligation and have no indications of growth."

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

Today, the media company announced a multi-year deal increasing the general fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast arrangement, together with a deal reached this year with cable and broadband provider Charter, will be a template for future settlements 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)