Shares dive 13% after restructuring statement

Follows path taken by Comcast's brand-new spin-off company

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds details, background, remarks from industry 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 businesses such as CNN from streaming and studio operations such as Max, laying the groundwork for a prospective sale or spinoff of its TV business as more cable subscribers cut the cord.

Shares of Warner jumped after the company stated the brand-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 companies are considering alternatives for fading cable TV companies, a long time money cow where incomes are eroding as countless consumers embrace streaming video.

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

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

"We highly think there is capacity for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for traditional 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 TV organization 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 different department along with movie 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 lastly paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will separate growing studio and streaming assets from lucrative however diminishing cable television business, providing a clearer financial investment photo and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and advisor predicted Paramount and others may take a similar 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 placing the business for its next chess relocation, wrote MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved or knocked off the board, or if additional debt consolidation will take place-- it refers who is the buyer and who is the seller," wrote Fishman.

Zaslav indicated that scenario during Warner Bros Discovery's investor call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market consolidation.

Zaslav had taken part in merger talks with Paramount late in 2015, though a deal never ever emerged, according to a regulatory filing last month.

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

"The structure modification would make it much easier for WBD to sell its linear TV networks," eMarketer expert Ross Benes stated, referring to the cable organization. "However, finding a purchaser will be tough. The networks owe money and have no indications of development."

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

Today, the media business revealed a multi-year offer 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 and broadband company Charter, will be a template for future settlements with suppliers. That might help 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)