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1 Warner Bros Discovery Sets Stage For Potential Cable Deal By

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Shares dive 13% after reorganizing announcement
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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

(New throughout, includes information, background, remarks from market experts and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped after the company said the 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 television organizations, a longtime cash cow where revenues are wearing down as countless consumers embrace streaming video.

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

Bank of America research expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable possessions are a "extremely sensible partner" for Comcast's new spin-off company.

"We highly believe there is capacity for relatively sizable synergies if WBD's linear networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the market term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable television company 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 separate division together with movie studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media market, as investments in streaming services such as Warner Bros Discovery's Max are finally settling.

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

Brightcove CEO said Warner Bros Discovery's new business structure will separate growing studio and streaming assets from successful but diminishing cable television organization, providing a clearer financial investment picture and most likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and consultant predicted 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 acquiring 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 more combination will happen-- it refers who is the purchaser and who is the seller," composed Fishman.

Zaslav indicated that circumstance during Warner Bros Discovery's investor call last month. He stated he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media industry debt consolidation.

Zaslav had engaged 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 carries $40.4 billion in financial obligation.

"The structure change would make it simpler for WBD to sell off its direct TV networks," eMarketer analyst Ross Benes stated, describing the cable TV business. "However, discovering a buyer will be difficult. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery composed down the worth of its TV assets by over $9 billion due to unpredictability around fees from cable television and satellite distributors and sports betting rights renewals.
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This week, the media company announced a multi-year offer increasing the general costs Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with a deal reached this year with cable and broadband company Charter, will be a template for future settlements with distributors. That might assist support rates for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles