Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

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

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped 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 considering choices for fading cable services, a longtime golden goose where profits are wearing down as millions of customers embrace streaming video.

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

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

"We strongly think there is capacity for fairly sizable synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, using the industry term for traditional tv.

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

Under the brand-new structure for Warner Bros Discovery, the cable television business 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 different division along with movie studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming properties from rewarding however shrinking cable television TV organization, offering a clearer investment picture and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser predicted Paramount and others might 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 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 around or knocked off the board, or if additional consolidation will take place-- it is a matter of who is the purchaser and who is the seller," composed Fishman.

Zaslav indicated that scenario throughout Warner Bros Discovery's financier call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market consolidation.

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

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

"The structure change would make it simpler for WBD to sell its linear TV networks," eMarketer expert Ross Benes said, referring to the cable service. "However, finding a purchaser will be difficult. The networks owe money and have no indications of growth."

In August, Warner Bros Discovery made a note of the value of its TV possessions by over $9 billion due to uncertainty around fees from cable television and satellite suppliers and sports betting rights renewals.

This week, the media business announced a multi-year offer increasing the general charges Comcast will pay to distribute Warner Bros Discovery's networks.

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