Warner Bros Discovery Sets Stage For Potential Cable Deal By > 자유게시판

Shares jump 13% after restructuring statement

Follows course taken by Comcast's brand-new spin-off business

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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 chose to separate its decreasing cable businesses such as CNN from streaming and studio operations such as Max, preparing for a potential sale or spinoff of its TV organization as more cable subscribers cut the cable.

Shares of Warner jumped after the company 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 alternatives for fading cable companies, a longtime money cow where incomes are eroding as millions of consumers welcome streaming video.

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

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

"We strongly think there is capacity for relatively large synergies if WBD's direct networks were combined with Comcast SpinCo," composed Ehrlich, utilizing the industry term for traditional tv.

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

Under the new structure for Warner Bros Discovery, the cable service including TNT, Animal Planet and CNN will be housed in a system called Global Linear Networks.

Streaming platforms Max and Discovery+ will be under a separate department in addition to movie 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 paying off.

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

Brightcove CEO Marc DeBevoise said Warner Bros Discovery's brand-new business structure will differentiate growing studio and streaming properties from profitable but shrinking cable service, providing a clearer financial investment image and likely setting the phase for a sale or spin-off of the cable television system.

The media veteran and consultant forecasted 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 obtaining the even larger target, AT&T's WarnerMedia, is placing the company for its next chess move, wrote MoffettNathanson expert Robert Fishman.

"The concern is not whether more pieces will be moved around or knocked off the board, or if further consolidation will happen-- it is a matter of who is the purchaser and who is the seller," wrote Fishman.

Zaslav indicated that circumstance throughout Warner Bros Discovery's investor call last month. He said he expected President-elect Donald Trump's administration would be friendlier to deal-making, unlocking to media market debt consolidation.

Zaslav had engaged in merger talks with Paramount late in 2015, though an offer never materialized, according to a regulative filing last month.

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

"The structure change would make it much easier for WBD to sell its linear TV networks," eMarketer expert Ross Benes stated, describing the cable company. "However, discovering a buyer will be difficult. The networks are in financial obligation and have no signs of development."

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

Today, the media company announced a multi-year deal increasing the overall fees Comcast will pay to disperse Warner Bros Discovery's networks.

Warner Bros Discovery is sports betting the Comcast agreement, together with an offer reached this year with cable television and broadband provider Charter, will be a design template for future with suppliers. That could assist stabilize 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)