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

Shares dive 13% after statement

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

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Challenges seen in selling debt-laden linear TV networks

(New throughout, adds information, background, remarks from market experts 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 organizations 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 customers cut the cord.

Shares of Warner leapt after the company said the 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 considering choices for fading cable television TV services, a long time cash cow where profits are wearing down 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 business would be well capitalized and positioned to get other cable television networks if the industry consolidates, one source told Reuters.

Bank of America research expert Jessica Reif Ehrlich wrote that Warner Bros Discovery's cable tv possessions are a "really rational partner" for Comcast's new spin-off business.

"We highly believe there is capacity for relatively large synergies if WBD's linear networks were combined with Comcast SpinCo," wrote Ehrlich, utilizing the industry term for traditional tv.

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

Under the new structure for Warner Bros Discovery, the cable television company 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 together with film studios, including Warner Bros Pictures and New Line Cinema.

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

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

Brightcove CEO Marc DeBevoise stated Warner Bros Discovery's brand-new corporate structure will separate growing studio and streaming possessions from rewarding however diminishing cable television TV business, providing a clearer investment image and most likely setting the phase for a sale or spin-off of the cable television unit.

The media veteran and adviser anticipated 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 larger target, AT&T's WarnerMedia, is placing the business for its next chess move, wrote MoffettNathanson expert Robert Fishman.

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

Zaslav indicated that scenario during Warner Bros Discovery's investor call last month. He said he anticipated President-elect Donald Trump's administration would be friendlier to deal-making, opening the door to media market combination.

Zaslav had actually taken part 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 care, noting Warner Bros Discovery carries $40.4 billion in debt.

"The structure modification would make it much easier for WBD to sell its direct TV networks," eMarketer analyst Ross Benes stated, referring to the cable television service. "However, discovering a buyer will be tough. The networks are in debt and have no indications of growth."

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

Today, the media business revealed a multi-year deal increasing the overall charges 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 television and broadband supplier Charter, will be a template for future negotiations with suppliers. That might help stabilize 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)