Shares dive 13% after restructuring statement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes information, background, remarks from industry experts and experts, updates share rates)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner jumped after the company stated 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 cash cow where earnings are eroding as countless consumers accept streaming video.

Comcast last month unveiled strategies to divide most of its NBCUniversal cable networks into a brand-new public company. The brand-new business would be well capitalized and placed to obtain other cable television networks if the market consolidates, one source informed Reuters.

Bank of America research analyst Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable television service properties are a "extremely rational partner" for Comcast's 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 traditional tv.

"Further, our company believe WBD's standalone streaming and studio properties would be an appealing 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 an unit called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate department along with film 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 paying off.

"Streaming won as a behavior," stated Jonathan Miller, primary executive 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 separate growing studio and streaming possessions from successful but shrinking cable business, providing a clearer investment image and most likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and advisor forecasted Paramount and others might take a comparable 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 analyst Robert Fishman.

"The question is not whether more pieces will be moved or knocked off the board, or if additional combination will take place-- it is a matter of who is the buyer and who is the seller," composed Fishman.

Zaslav signaled that scenario during 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 industry combination.

Zaslav had engaged in merger talks with Paramount late last year, though a deal never emerged, according to a regulatory filing last month.

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

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

In August, Warner Bros Discovery documented the worth of its TV assets by over $9 billion due to unpredictability around charges from cable television and satellite distributors and sports betting rights renewals.

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

Warner Bros Discovery is wagering the Comcast arrangement, together with an offer reached this year with cable and broadband supplier Charter, will be a template for future negotiations 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; Editing by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)