Shares dive 13% after reorganizing statement

Follows course taken by Comcast’s new spin-off business

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Challenges seen in offering debt-laden linear TV networks

(New throughout, adds information, background, comments from market insiders and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable television companies such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV business as more cable customers cut the cord.
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Shares of Warner leapt after the business said the new structure would be more deal friendly and it anticipated to complete the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media companies are considering options for fading cable organizations, a long time golden goose where profits are eroding as countless customers embrace streaming video.

Comcast last month to split the majority of its NBCUniversal cable networks into a brand-new public company. The new company would be well capitalized and positioned to acquire other cable television networks if the industry consolidates, one source informed Reuters.
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Bank of America research study expert Jessica Reif Ehrlich composed that Warner Bros Discovery’s cable television service properties are a “extremely rational partner” for Comcast’s new spin-off business.

"We strongly believe there is capacity for fairly substantial synergies if WBD’s direct networks were combined with Comcast SpinCo,” wrote Ehrlich, using the market term for standard tv.

"Further, we believe WBD’s standalone streaming and studio possessions would be an attractive takeover target.“

Under the new structure for Warner Bros Discovery, the cable television business 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 in addition to film studios, including 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 settling.

"Streaming won as a habits,” said Jonathan Miller, president of digital media investment firm Integrated Media. “Now, it’s winning as a service.“

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery’s brand-new business structure will differentiate growing studio and streaming possessions from lucrative however shrinking cable TV organization, giving a clearer financial investment picture and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and advisor predicted Paramount and others may take a comparable course.

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

"The question is not whether more pieces will be walked around or knocked off the board, or if further combination will occur-- it refers who is the buyer 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 debt consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though an offer never emerged, according to a regulative filing last month.

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

"The structure modification would make it much easier for WBD to sell its direct TV networks,” eMarketer expert Ross Benes stated, describing the cable television business. “However, finding a buyer will be tough. The networks are in debt and have no indications of development.“

In August, Warner Bros Discovery made a note of 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.
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This week, the media company announced a multi-year offer increasing the general fees Comcast will pay to disperse Warner Bros Discovery’s networks.

Warner Bros Discovery is sports betting the Comcast contract, together with a deal reached this year with cable television and broadband service provider Charter, will be a design 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