Shares dive 13% after reorganizing statement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, remarks from market insiders and analysts, updates share costs)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

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

Shares of Warner leapt after the business 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 business are considering alternatives for fading cable organizations, a long time cash cow where profits are wearing down as countless consumers embrace streaming video.

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

Bank of America research study expert Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable assets are a "really rational partner" for Comcast's new spin-off business.

"We highly believe there is potential for fairly substantial synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, using the market term for standard tv.

"Further, we think 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 film studios, including Warner Bros Pictures and New Line Cinema.

The restructuring shows an inflection point for the media market, as financial 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 investment business Integrated Media. "Now, it's winning as a company."

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new corporate structure will separate growing studio and streaming assets from profitable but diminishing cable business, offering a clearer investment photo and likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and consultant anticipated 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 obtaining the even bigger target, AT&T's WarnerMedia, is positioning the company for its next chess relocation, composed MoffettNathanson analyst Robert Fishman.

"The concern is not whether more pieces will be walked around or knocked off the board, or if more combination will happen-- it refers who is the purchaser and who is the seller," wrote Fishman.

Zaslav indicated that scenario 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, unlocking to media market consolidation.

Zaslav had actually engaged in merger talks with Paramount late in 2015, though a deal never emerged, 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 stated, describing the cable service. "However, discovering a purchaser will be tough. The networks owe money and have no indications of growth."

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

Today, the media company announced a multi-year deal increasing the total costs Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast contract, together with a deal reached this year with cable television and broadband supplier Charter, will be a design template for future negotiations with suppliers. 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)