Shares jump 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, remarks from market experts 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 decreasing cable organizations such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV company as more cable subscribers cut the cable.

Shares of Warner leapt after the company said the brand-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 thinking about alternatives for fading cable TV services, a longtime golden goose where revenues are wearing down as millions of customers welcome streaming video.

Comcast last month revealed plans to divide many of its NBCUniversal cable networks into a new public company. The new business would be well capitalized and placed to get other cable television networks if the industry combines, one source told Reuters.

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

"We highly think there is capacity for fairly large synergies if WBD's linear networks were integrated with Comcast SpinCo," wrote Ehrlich, using the market term for conventional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable TV business 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 division together with film 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 paying off.

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

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

The media veteran and consultant anticipated Paramount and others may take a similar course.

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

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

Zaslav indicated that situation throughout Warner Bros Discovery's investor call last month. He stated he prepared for President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market consolidation.

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 caution, keeping in mind Warner Bros Discovery brings $40.4 billion in debt.

"The structure modification would make it easier for WBD to sell off its linear TV networks," eMarketer analyst Ross Benes said, describing the cable business. "However, discovering a purchaser will be challenging. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery documented the value of its TV properties by over $9 billion due to uncertainty around costs from cable and satellite suppliers and sports betting rights renewals.

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

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