Shares jump 13% after reorganizing announcement

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

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Challenges seen in selling debt-laden direct TV networks

(New throughout, includes information, background, comments 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 decided to separate its declining cable services such as CNN from streaming and studio operations such as Max, preparing for a possible sale or spinoff of its TV company as more cable television subscribers cut the cord.

Shares of Warner jumped after the business said 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 companies are thinking about options for fading cable television services, a longtime golden goose where profits are wearing down as millions of customers welcome streaming video.

Comcast last month unveiled strategies to divide many of its NBCUniversal cable networks into a new public business. The new company would be well capitalized and positioned to acquire other cable television networks if the industry consolidates, one source informed Reuters.

Bank of America research analyst Jessica Reif Ehrlich composed that Warner Bros Discovery's cable properties are a "extremely sensible partner" for Comcast's new spin-off company.

"We highly think there is capacity for relatively sizable synergies if WBD's linear networks were integrated with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for conventional tv.

"Further, we believe WBD's standalone streaming and studio assets would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable service 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 separate department together with film studios, consisting of Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will differentiate growing studio and streaming assets from successful but diminishing cable television service, giving a clearer financial investment picture and likely setting the stage for a sale or spin-off of the cable television system.

The media veteran and consultant predicted 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 getting the even larger target, AT&T's WarnerMedia, is placing the business for its next chess move, composed MoffettNathanson expert Robert Fishman.

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

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

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

Others injected a note of caution, noting Warner Bros Discovery brings $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, referring to the cable service. "However, finding a purchaser will be difficult. The networks owe money and have no signs of growth."

In August, Warner Bros Discovery wrote down the worth of its TV possessions by over $9 billion due to uncertainty around charges from cable television and satellite suppliers and sports betting rights renewals.

This week, the media company announced a multi-year deal increasing the general charges 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 company Charter, will be a template for future settlements 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; Editing by Shilpi Majumdar, Arun Koyyur, Keith Weir and David Gregorio)