Shares dive 13% after restructuring announcement

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

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Challenges seen in offering debt-laden direct TV networks

(New throughout, includes information, background, remarks from market insiders and experts, updates share rates)

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, laying the foundation for a potential sale or spinoff of its TV business as more cable television subscribers cut the cable.

Shares of Warner jumped after the company stated the new structure would be more deal friendly and it expected to finish 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 longtime golden goose where revenues are deteriorating as millions of consumers welcome streaming video.

Comcast last month unveiled plans to split many of its NBCUniversal cable networks into a new public company. The new company would be well capitalized and placed to get other cable networks if the market combines, one source told Reuters.

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

"We strongly think there is capacity for relatively sizable synergies if WBD's linear networks were integrated with Comcast SpinCo," composed Ehrlich, using the industry term for traditional television.

"Further, our company believe WBD's standalone streaming and studio properties would be an appealing takeover target."

Under the brand-new structure for Warner Bros Discovery, the cable TV service 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 division in addition to film studios, consisting of 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 finally settling.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's new business structure will distinguish growing studio and streaming possessions from successful but diminishing cable television service, offering a clearer investment image and likely setting the stage for a sale or spin-off of the cable television unit.

The media veteran and consultant forecasted 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 placing 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 additional debt consolidation will occur-- it is a matter of who is the buyer and who is the seller," composed 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, unlocking to media market debt consolidation.

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

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

"The structure change would make it much easier for WBD to sell its linear TV networks," eMarketer analyst Ross Benes stated, describing the cable service. "However, finding a buyer will be tough. The networks owe money and have no indications of development."

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

Today, the media business announced a multi-year offer increasing the overall costs Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast arrangement, together with an offer reached this year with cable and broadband service provider Charter, will be a template for future negotiations with distributors. That might help support 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)