Shares jump 13% after reorganizing statement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds details, background, comments from market insiders and experts, 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 services such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV company as more cable television subscribers cut the cable.

Shares of Warner jumped after the business stated 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 companies are considering alternatives for fading cable television TV organizations, a longtime money cow where revenues are wearing down as countless customers accept streaming video.

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

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

"We strongly believe there is potential for relatively large synergies if WBD's linear networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable television TV organization consisting of 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 division along with film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media industry, as financial investments in streaming services such as Warner Bros Discovery's Max are lastly 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 business."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new corporate structure will distinguish growing studio and streaming properties from rewarding but diminishing cable TV service, 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 adviser anticipated Paramount and others may take a similar path.

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 placing the business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

"The question is not whether more pieces will be moved or knocked off the board, or if further debt consolidation will occur-- it is a matter of who is the buyer and who is the seller," wrote Fishman.

Zaslav signaled that scenario throughout Warner Bros Discovery's investor 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 actually participated in merger talks with Paramount late in 2015, though a deal never ever materialized, according to a regulatory filing last month.

Others injected a note of care, noting Warner Bros Discovery carries $40.4 billion in debt.

"The structure modification would make it much easier for WBD to offer off its direct TV networks," eMarketer analyst Ross Benes said, referring to the cable TV company. "However, discovering a buyer will be challenging. The networks are in debt and have no indications of development."

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

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

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