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Shares dive 13% after restructuring statement
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Follows course taken by Comcast’s new spin-off business
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Challenges seen in selling debt-laden networks

(New throughout, includes details, background, comments from industry experts and experts, 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 organizations 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 subscribers cut the cable.

Shares of Warner leapt after the business said the brand-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 business are considering options for fading cable television organizations, a long time golden goose where incomes are wearing down as millions of consumers welcome streaming video.

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

Bank of America research expert Jessica Reif Ehrlich wrote that Warner Bros Discovery’s cable television properties are a “very logical partner” for Comcast’s new spin-off company.

“We highly think there is potential for relatively large synergies if WBD’s direct networks were integrated with Comcast SpinCo,” composed Ehrlich, using the market term for conventional television.

“Further, our company 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 business consisting of TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.
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Streaming platforms Max and Discovery+ will be under a different department together 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 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 stated Warner Bros Discovery’s new corporate structure will differentiate growing studio and streaming possessions from profitable but shrinking cable television TV business, providing a clearer investment picture and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and adviser 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 getting the even larger target, AT&T’s WarnerMedia, is positioning the company for its next chess move, wrote MoffettNathanson analyst Robert Fishman.

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

Zaslav signaled that situation throughout Warner Bros Discovery’s investor call last month. He stated he anticipated President-elect Donald Trump’s administration would be friendlier to deal-making, unlocking to media industry consolidation.

Zaslav had actually participated in merger talks with Paramount late last year, though an offer never ever materialized, according to a regulative filing last month.

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

“The structure modification would make it much easier for WBD to offer off its direct TV networks,” eMarketer analyst Ross Benes stated, describing the cable television organization. “However, finding a purchaser will be tough. The networks are in debt and have no indications of development.”

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

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable television and broadband service provider Charter, will be a design template for future negotiations with distributors. 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