Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes details, background, comments from market insiders and analysts, 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 TV companies such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV company as more cable television customers cut the cable.

Shares of Warner leapt after the business said the new structure would be more deal friendly and it anticipated to finish the split by the middle of 2025. Warner shares closed at $12.49, up more than 15%.

Media business are thinking about choices for fading cable TV businesses, a longtime golden goose where profits are eroding as countless consumers welcome streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable networks into a brand-new public company. The new company would be well capitalized and placed to get other cable networks if the industry consolidates, one source told Reuters.

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

"We strongly believe there is capacity for fairly substantial synergies if WBD's linear networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the market term for traditional tv.

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

Under the new structure for Warner Bros Discovery, the cable television 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 separate department along with film studios, consisting of 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 paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new business structure will distinguish growing studio and streaming properties from rewarding but diminishing cable service, offering a clearer financial investment image and likely setting the phase for a sale or spin-off of the cable unit.

The media veteran and advisor forecasted 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 bigger 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 moved or knocked off the board, or if more debt consolidation will take place-- it refers who is the purchaser and who is the seller," composed Fishman.

Zaslav signaled 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, opening the door to media industry combination.

Zaslav had actually taken part in merger talks with Paramount late last year, though an offer never emerged, according to a regulatory filing last month.

Others injected a note of care, noting Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure change would make it much easier for WBD to sell off its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable service. "However, discovering a buyer will be challenging. The networks owe money and have no indications of growth."

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

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

Warner Bros Discovery is wagering the Comcast contract, together with an offer reached this year with cable television and broadband provider Charter, will be a template for future settlements with suppliers. That might 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)