Shares dive 13% after restructuring announcement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds details, background, comments from industry insiders and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

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 thinking about choices for fading cable companies, a longtime golden goose where revenues are eroding as millions of customers welcome streaming video.

Comcast last month revealed strategies to divide the majority of its NBCUniversal cable television 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.

Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television service possessions are a "really rational partner" for Comcast's new spin-off company.

"We highly believe there is potential for fairly large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for conventional television.

"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 service including TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a different division along 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 lastly settling.

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new business structure will distinguish growing studio and streaming possessions from rewarding but diminishing cable business, giving a clearer financial investment photo and most likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and consultant predicted Paramount and others may take a comparable path.

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 business for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be moved around or knocked off the board, or if more combination will take place-- it refers who is the purchaser and who is the seller," composed Fishman.

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

Zaslav had engaged in merger talks with Paramount late in 2015, though an offer never 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 financial obligation.

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

In August, Warner Bros Discovery jotted down the value of its TV possessions by over $9 billion due to unpredictability around fees from cable and satellite distributors and sports betting rights renewals.

Today, the media company revealed a multi-year offer increasing the general fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with an offer reached this year with cable and broadband provider Charter, will be a template for future settlements with suppliers. That could assist support rates 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)