Shares jump 13% after reorganizing announcement
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Follows path taken by Comcast’s new spin-off company

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Challenges seen in offering debt-laden direct TV networks
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(New throughout, adds information, background, remarks from market insiders and analysts, 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 businesses such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV organization as more cable television customers cut the cable.
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Shares of Warner jumped after the business said the 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 television businesses, a longtime cash cow where profits are wearing down as countless consumers embrace streaming video.

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

Bank of America research study analyst Jessica Reif Ehrlich composed that Warner Bros Discovery’s cable tv possessions are a “extremely logical partner” for Comcast’s brand-new spin-off company.

“We strongly think there is potential for relatively large synergies if WBD’s linear networks were combined with Comcast SpinCo,” composed Ehrlich, utilizing the industry term for conventional tv.

“Further, we believe WBD’s standalone streaming and studio possessions would be an appealing takeover target.”

Under the brand-new structure for Warner Bros Discovery, the cable television service consisting of 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 in addition to movie studios, including Warner Bros Pictures and New Line Cinema.

The restructuring reflects an inflection point for the media industry, as financial investments in streaming services such as Warner Bros Discovery’s Max are finally settling.

“Streaming won as a habits,” said 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 new corporate structure will separate growing studio and streaming properties from rewarding but diminishing cable TV organization, offering a clearer investment image and likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and consultant anticipated Paramount and others might 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 bigger target, AT&T’s WarnerMedia, is positioning the company for its next chess move, expert Robert Fishman.

“The question is not whether more pieces will be walked around or knocked off the board, or if additional debt consolidation will take place-- it is a matter of who is the purchaser and who is the seller,” composed 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, opening the door to media industry consolidation.

Zaslav had actually participated in merger talks with Paramount late in 2015, though a deal never emerged, according to a regulative filing last month.
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Others injected a note of caution, keeping in mind Warner Bros Discovery brings $40.4 billion in financial obligation.

“The structure change would make it simpler for WBD to sell off its direct TV networks,” eMarketer expert Ross Benes said, referring to the cable television service. “However, finding a purchaser will be tough. The networks are in debt and have no signs of growth.”

In August, Warner Bros Discovery documented the value of its TV properties by over $9 billion due to uncertainty around charges from cable television and satellite suppliers and sports betting rights renewals.
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This week, the media business announced a multi-year deal increasing the overall fees Comcast will pay to disperse Warner Bros Discovery’s networks.

Warner Bros Discovery is sports betting the Comcast contract, together with a deal reached this year with cable and broadband service provider Charter, will be a template for future settlements with distributors. That might help support pricing for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles