Shares dive 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, adds information, 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 decided to separate its decreasing cable organizations such as CNN from streaming and studio operations such as Max, preparing for a prospective sale or spinoff of its TV service as more cable television subscribers cut the cord.

Shares of Warner leapt after the company stated 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 companies are thinking about alternatives for fading cable services, a longtime cash cow where profits are eroding as millions of consumers accept streaming video.

Comcast last month revealed plans to split the majority of its NBCUniversal cable television networks into a brand-new public business. The 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 study expert Jessica Reif Ehrlich composed that Warner Bros Discovery's cable television possessions are a "very logical partner" for Comcast's new spin-off company.

"We strongly think there is potential for relatively sizable synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, using the market term for conventional tv.

"Further, we think WBD's standalone streaming and studio possessions 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 in addition to film studios, including Warner Bros Pictures and New Line Cinema.

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

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

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

The media veteran and consultant predicted Paramount and others might take a similar path.

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 business for its next chess relocation, wrote MoffettNathanson analyst Robert Fishman.

"The question is not whether more pieces will be moved or knocked off the board, or if further consolidation will occur-- it refers who is the purchaser and who is the seller," wrote Fishman.

Zaslav signified that circumstance 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, unlocking to media industry combination.

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

Others injected a note of caution, keeping in mind Warner Bros Discovery carries $40.4 billion in financial obligation.

"The structure change would make it much easier for WBD to offer off its linear TV networks," eMarketer analyst Ross Benes said, describing the cable organization. "However, discovering a purchaser will be tough. The networks owe money and have no signs of development."

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

Today, the media business revealed a multi-year deal increasing the general fees Comcast will pay to distribute Warner Bros Discovery's networks.

Warner Bros Discovery is wagering the Comcast agreement, together with an offer reached this year with cable and broadband company Charter, will be a template for future settlements with distributors. That could assist support pricing 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)