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1 Warner Bros Discovery Sets Stage For Potential Cable Deal By

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Shares dive 13% after reorganizing statement
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Follows path taken by Comcast's new spin-off business

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Challenges seen in offering debt-laden direct TV networks

(New throughout, adds information, background, remarks from industry insiders and analysts, updates share prices)

By Dawn Chmielewski, Deborah Mary Sophia and Aditya Soni

Dec 12 (Reuters) - Warner Bros Discovery on Thursday decided to separate its declining cable TV companies such as CNN from streaming and studio operations such as Max, laying the foundation for a possible sale or spinoff of its TV business as more cable subscribers cut the cable.

Shares of Warner leapt after the company stated the 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 choices for fading cable television TV companies, a longtime golden goose where profits are deteriorating as millions of customers accept streaming video.

Comcast last month unveiled strategies to split the majority of its NBCUniversal cable television networks into a brand-new public company. The brand-new company would be well capitalized and positioned to acquire other cable television networks if the industry consolidates, one source told Reuters.

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

"We strongly believe there is capacity for fairly sizable synergies if WBD's direct networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for standard television.

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

Under the new structure for Warner Bros Discovery, the cable television 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 separate division along with film 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 settling.

"Streaming won as a habits," stated Jonathan Miller, chief executive of digital media financial investment business Integrated Media. "Now, it's winning as a business."
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Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's new corporate structure will distinguish growing studio and streaming assets from profitable but shrinking cable service, providing a clearer financial investment photo and likely setting the phase for a sale or spin-off of the cable system.
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The media veteran and advisor predicted Paramount and others may take a comparable course.

CEO David Zaslav, a veteran deal-maker who led Discovery through its acquisition of Scripps Networks Interactive before obtaining the even bigger target, AT&T's WarnerMedia, is positioning 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 additional consolidation will occur-- it refers who is the purchaser and who is the seller," composed Fishman.

Zaslav signaled that situation throughout Warner Bros Discovery's financier 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 engaged in merger talks with Paramount late last year, though an offer never ever materialized, according to a last month.

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

"The structure change would make it much easier for WBD to offer off its linear TV networks," eMarketer expert Ross Benes said, referring to the cable television TV company. "However, finding a purchaser will be challenging. The networks are in debt and have no indications of development."

In August, Warner Bros Discovery jotted down the worth of its TV possessions by over $9 billion due to unpredictability around charges from cable television and satellite suppliers and sports betting rights renewals.
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This week, the media business announced a multi-year deal increasing the total fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast contract, together with a deal reached this year with cable and broadband company Charter, will be a template for future settlements with distributors. That might assist stabilize pricing for the domestic pay TV market. (Reporting by Deborah Sophia and Aditya Soni in Bengaluru, Dawn Chmielewski in Los Angeles